Buying commercial property is a significant investment. You may be looking to start a business, rent out a space or flip a building to make a profit. Regardless of your intention, you should prepare for the purchasing process in advance.

Commercial transactions tend to be more complicated than residential ones because of the paperwork, legal frameworks and amounts of money involved. Obviously, having a conveyancer to guide you through the purchase will be a great help.

Here are 4 additional questions to ask yourself during the purchasing process.    

1. Do you know the history of the property?

Similar to how you may find out who owned a home many years before, doing a background check on your commercial property of interest is very important. Background checks help determine whether the title is clean and if the property has any outstanding municipal fines. For example, some businesses may have accumulated fines for improper waste disposal, harmful emissions and illegal construction. After the property is sold, a new owner may end up incurring these fines without prior knowledge. Make sure the title to the property is clean before moving forward with other purchasing steps.   

2. Will you be a landlord?

If you're buying a commercial property with the goal of renting it out, you'll have to consider what responsibilities you will have as a landlord. Be prepared to take over any outstanding leases, address tenant concerns and set rent terms for upcoming periods. Furthermore, you should determine whether you or your tenants are responsible for utilities and municipal fees such as waste removal or environmental care.

3. How will the ownership structure be?

Many people invest in commercial properties as a group. This may be in the form of a partnership, private holding or public corporation. Each ownership structure comes with its own legal requirements and paperwork processes. For example, public corporation purchases may restrict the use of the property for specific business-related functions. There are also tax implications in the case of solo or partnership buyers: specifically, this refers to capital gains tax.

Work with a property conveyancer to ensure that the sale contract, tax documents and financing requirements are in good shape.  

4. Is the sales contract clear and understandable?

Speaking of the sales contract, all buyers should carefully review this document to ensure that there are no errors. The sales contract is the main document used to transfer ownership. Once finalised, legal ownership of the property is transferred from the seller to the buyer. Have your conveyancer, real estate agent and attorney review this contract before it can be finalised.

Locate a property conveyancing service to learn more.