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Preparing to sell your commercial property

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Top tips for being well-prepared for a commercial property sale.

It pays to be well-prepared before you put your commercial property on the market in a bumpy market. Your solicitor will help you to be ready for the kinds of questions you should expect from prospective buyers as they and their solicitors carry out due diligence checks. The more potential problems you can spot and deal with in advance, the better your chances of a smooth and speedy sale. It will also make it harder for a buyer to attempt to negotiate a reduction in price.

You may have heard the legal phrase “caveat emptor” which means “buyer beware” and cautions that anyone thinking of buying property is responsible for asking the right questions to uncover all the important information about that property. However, the seller still has important responsibilities to provide information and good legal advice will ensure you do not find yourself in a weak negotiating position.

What must you tell your buyer?

The buyer will get the majority of their information about the property by making standard form enquiries and by carrying out a range of searches in the various datasets that relate to the property. Alongside these, you must reveal any problems with the title to the property or rights that affect it which would not be obvious to the buyer. This includes things like underground pipes, restrictions on the use of the property, and missing title documents. You must give this information even if your buyer does not ask specific questions.

In practice, you should expect a long list of detailed enquiries about the property. These are usually in a well-known standard format, which is helpful if you want to be prepared before your property goes on the market. Your solicitor can tell you exactly what you are likely to be asked about and can help you prepare answers in advance. The enquiries will cover a wide range of subjects, including boundaries, disputes, rights for the property over other land and rights others have over your land. There will also be questions about regulatory issues such as fire safety and energy efficiency, and financial questions covering rates and other outgoings and various taxes that relate to the property.

You must ensure that your answers to any of the questions are as accurate as possible. You do not have to give any information about the physical state of the property, as the buyer is expected to arrange for surveys and inspections. However, you must be very careful not to say anything that is misleading. For example, one of the standard questions is whether the property has been affected by any structural defects. You could legitimately say: ‘The buyer must rely on their own inspection,’ but if you were to say ‘No’ or ‘Not so far as the seller is aware,’ you could run into trouble if that turns out to be inaccurate. Your solicitor will advise you on how best to word your answers.

When you give your answers, you are expected to have made reasonable efforts to find any information that may be relevant in your records and if you say: ‘Not so far as the seller is aware,’ this implies that you have done that research. This is another reason why preparing well in advance is so helpful because you can avoid delay once you have a potential buyer.

If you give misleading answers and your buyer relies on them, you could find yourself liable to pay damages, on the basis that you have made a misrepresentation.

Search packs

Anyone buying property will also need to make a range of data searches to reveal things like planning and road proposals, flood risk and other issues with the site. These can take time, so you could ask your solicitor to obtain a set of the most common searches in advance. You can then present these to potential buyers as a pack, together with answers to the standard enquiries, which may speed up the deal. You should not do this more than three months ahead though, as searches have a limited shelf life.

Spotting problems in advance

As well as dealing with searches and enquiries in advance, your solicitor will be able to help resolve other issues that could hold up a sale. For example, there may be some title deeds or planning consents missing or you may need formal consent from a third party before you can legally transfer the property. A buyer’s solicitor will query all of these, so the sooner your solicitor can get to work on sorting them out, the better. The Land Registry currently has a large backlog of registrations to complete, so you may find that (like many commercial owners) you want to sell before the property has been formally registered in your name. Your solicitor may be able to get the registration expedited if the delay looks likely to hold up another transaction. Otherwise, they will need to cover this point in the sale contract.

Regulatory requirements

You must not put your property on the market unless you have a valid Energy Performance Certificate (EPC). If you bought it before 2012 and have not let the property out, you may not have an EPC, so you must get one in place if you plan to sell. There is currently no minimum rating required for the sale of a commercial property, but if your buyer intends to let to commercial tenants they will need to see an EPC of at least E. Given the increasing focus on climate change, you may find it easier to sell if you take steps to improve your EPC rating beyond that minimum.

If you are planning to sell a mixed-use property with at least two residential units, you should expect to be asked questions relating to fire safety. The Building Safety Act 2022 is being brought into force in stages. It imposes new requirements for buildings over a certain height which contain residential units and your solicitor will be able to advise you about this.

How we can help

Any time you spend preparing the ground will help make your sale go more smoothly and our experienced commercial property team is here to guide you through the process. For further information, please contact James Steward in the commercial property team on or email [email protected].


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