Suppose you’ve ever purchased a house or are considering one. In that case, you may have heard of the residential conveyancing process, which is the process of transferring property ownership from one person to another. If you’re thinking of buying or selling business property, you may believe that the process is similar. After all, you’re hoping to complete the same transfer of ownership, so it should follow the same steps, right?
However, although residential and commercial conveyancing fulfils the same fundamental purpose, some differences set them apart. Here’s what you need to know about conveyancing and the critical differences between residential and commercial property conveyancing:
All About Conveyancing
Conveyancing is the process of transferring property ownership from one individual or entity to another. It involves an agreement on the sale, the signing and exchanging contracts, and a conveyancing solicitor or licensed conveyancer to oversee the process. They will act on each party’s behalf to fulfil all the legal and administrative work required to guarantee that the purchase or sale is legal and valid. They’ll carry out tasks such as investigating the title to the property or premises and commissioning related searches.
Residential vs Commercial Conveyancing
Commercial property transactions involve premises like a store, warehouse, or office. The businesses operating these premises are usually limited companies, partnerships, or sole traders. Such property owners typically search for an ‘area’ to run their business from, and these premises are typically bought or sold as part of a broader purchase of a business. It is typical for the buyer to make an additional goodwill payment to ensure they have the right to access the previous owner’s client base and continue business under the same name.
On the other hand, residential property transactions consist of individuals buying or selling a home, like a house or a flat. The transaction is personal and is easily among the highest value ones in their lifetime.
The Residential and Commercial Conveyancing Process
The conveyancing process looks different for both transactions. In a residential property process, the buyer will instruct their conveyancer to contact the seller’s solicitor to acquire the contract pack. They will review the pack, ask questions, and conduct the necessary searches. They will also request a copy of the mortgage offer.
Once all their queries have been answered, the conveyancing solicitor or licensed conveyancer will inform the buyer of all the information they’ve gathered. When the buyer is satisfied, they will make arrangements to pay the deposit and start exchanging contracts. The buyer and seller will agree on a completion date and exchange contracts. At this time, they are both legally bound to the transaction. Both parties’ conveyancers will then draft and decide on the transfer deed and ask the parties to sign a final copy. On the completion date, the buyer’s conveyancing solicitor will prepare a completion statement, conduct pre-completion searches, and contact the buyer’s mortgage lender for the loan. The estate agent will release the keys, and the buyer’s solicitor will send the stamp duty payment to the HMRC, acquire the title deeds and transfer deed, then register the property under their name with the Land Registry.
On the other hand, in a commercial conveyancing transaction, a commercial property solicitor will examine the property title and carry out enquiries through Commercial Property Standard Enquiries or CPSEs. When the buyer is satisfied, both parties will negotiate and exchange draft contracts. The buyer pays the deposit, and the process legally commits both parties to the transaction. The buyer will carry out pre-completion searches and the appropriate body approves the transfer deed, after which the buyer will prepare the balance needed for the purchase. The seller will also discharge any mortgage present.
Upon completion, the buyer’s conveyancing solicitor will send the purchase payment to the seller’s solicitor and pay stamp duty land tax to the HMRC. They will also send an application to the Land Registry to register the property under the new owner.
Conclusion
Regardless of the kind of property you want to purchase, it is always prudent to consult with a conveyancing solicitor to understand the process involved. By using our guide, you’ll understand the differences between residential and commercial conveyancing and prepare yourself accordingly.
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