With the current situation and the COVID-19 lockdown, now more than ever there are additional things which need to be taken into account in relation to commercial property transactions. This is a helpful bullet point summary of things to consider.
- Rent – Many tenants will be looking to negotiate with their landlord in relation to rent to ease the financial burden. This could be dealt with by way a rent holiday, deferment or varying when the rent is payable. We are seeing a varied response to these requests.
- Forfeiture – Landlords are currently not permitted to forfeit a lease for non payment of rent, they are however permitted to forfeit for any other reason allowed under the terms of the lease. This moratorium on enforcement in respect of rent arrears is only temporary. Some landlords have made it clear that they are willing to use other remedies available to them should rent or other sums not be paid on time – such as the service of a statutory demand.
- Insurance – Landlords in particular should check their buildings insurance policies to review provisions relating to empty properties. Tenants should also consider if their business interruption insurance may be assistance to them.
- Other lease provisions – some leases contain provisions requiring the tenant to keep the property open for business, they may fall foul of these covenants during lockdown.
Selling and Buying
- Searches – searches are being delayed due to, for example, Local Authorities adjusting to working from home or being unable to do so. This may impact on timescales to exchange contracts particularly if the buyer is obtaining funding.
- Contract provisions – if you have already entered into a contract but completion has not yet taken place it is important to review the provisions that you have agreed so that you can be clear on your and other parties obligations and whether these can still be met. If you are in the process of negotiating a contract your ability to perform those obligations should be considered including whether there may be delays outside of yours or the other party’s control.
- Planning and other matters – Local Authorities are taking steps to ensure that planning does not grind to a holt whilst we are in lockdown, it is important if you are awaiting a planning decision that you contact your Local Authority to discuss this. If you are entering into a conditional contract then any condition dealing with timescales in relation to a planning permission should take possible delays into account.
- Searches – Some lenders are still requiring full searches and will not accept search indemnity policies, if there is a strict timescale in which monies from the finance are needed this should be taken into consideration.
- Valuations – Many valuers are unable to visit sites due to lockdown and as a result there have been delays in mortgage offers being issued.
- Changes with lenders – There are changes in the types of properties or types of finance which lenders are willing to agree to. It is important to speak to a broker and ensure that you will be able to obtain any required funding before committing to a transaction.