Commercial property sales contracts

A commercial property sales contract is a vital legal document outlining the terms and conditions for the sale of commercial real estate, whether it’s an office building, retail space, industrial facility, or land for commercial development.

This contract serves as a binding agreement between the buyer and seller, specifying essential details about the property, transaction terms, and legal obligations.

Having a well-drafted commercial property sales contract is crucial to protect both parties’ interests, reduce risks, and ensure the transaction goes smoothly.

What is a commercial property sales contract?

A commercial property sales contract is a legally binding document outlining the terms and conditions of a commercial property sale. It specifies details like purchase price, property description, payment terms, and contingencies, ensuring both buyer and seller understand their rights and obligations in the transaction.

Key elements of a commercial property sales contract

A comprehensive commercial property sales contract typically includes the following key elements:

1. Identification of parties: Clearly outlines the names and contact details of the buyer and seller, ensuring both parties are accurately represented and legally bound by the contract.
2. Property description: A precise description of the property, including its address and size. This section may also attach a plan showing the extent of the Property and reference property surveys and legal descriptions for accuracy.
3. Purchase price and payment terms: Specifies the agreed-upon purchase price and payment schedule, including any deposit requirements, down payments, or financing arrangements. This section also covers penalties for late payments and conditions for payment adjustments if needed.
4. Completion date: Outlines the date on which the sale and purchase will take place and conditions that must be fulfilled for completion, such as final payment, transfer of title, and allocation of costs.
5. Apportionment of expenses: Details which expenses will be covered by each party, including property taxes, utilities, insurance, and maintenance. Pro-rata adjustments may apply for expenses accrued before and after the completion date to ensure fairness.
6. Conditions for default: Defines the actions to be taken if either party defaults on the contract terms. This section includes remedies available to the non-breaching party, such as forfeiture of deposits.
7. Termination rights: Specifies the conditions under which the buyer or seller can legally terminate the contract, such as failure to meet certain conditions. Termination rights provide a structured exit if obligations aren’t met.
8. Dispute resolution: Outlines the process for resolving any disputes, commonly through mediation, arbitration, or legal proceedings, to ensure a clear path forward if disagreements arise.

Do you need a solicitor to sell a commercial property?

Yes, using a solicitor is highly recommended when selling a commercial property. A solicitor manages legal requirements, drafts contracts, conducts property searches, and ensures regulatory compliance, helping to avoid potential disputes and ensuring a smooth, legally sound transaction.