Insights from leading Melbourne Property Lawyers
While residential and commercial property conveyancing follow the same general principles, there are some significant differences between the two processes. Firstly, the type of property being bought is different. How leases are treated and drawn up by lawyers is not the same in residential and commercial instances of leasing. Business entities which buy commercial property may be subject to additional regulations under business law. Lastly, due diligence and GST must be considered. Let’s look at each of these issues in turn – the differences between residential and commercial property conveyancing.
Type of property
The main difference between residential and commercial property conveyancing is the type of property it concerns. Residential property is the kind that you buy to live in or to rent out for other people to live in. Commercial property houses a business, such as an office building, retail space, artists’ studio, gallery, veterinary, or doctor’s practice, among other commercial examples that could be named. The property’s intended use means that residential conveyancing is a lot simpler than commercial conveyancing, but that does not mean you should try to DIY either of them. Always consult professional conveyancing lawyers in Melbourne for the best advice on all kinds of conveyancing.
Leasing property
While leasing residential property is relatively straightforward, commercial property conveyancing must take into account various issues relating to leases. For instance, the terms of a commercial lease agreement are generally worked out between tenant and landlord in the negotiation process. So each commercial lease agreement will be particular to the individuals involved and their negotiated conditions. This fact means that it is vital that a potential new landlord has a legal team inspect the existing lease before they decide to buy the property. Matters that require consideration include options, rent increases, and ongoing expenses. These things should not be left to chance. The process of due diligence where commercial lease agreements are concerned also includes background checks on the tenant’s finances. If a tenant were to declare bankruptcy, adverse effects would be felt by the new landlord. When initiating commercial property conveyancing for a building that does not have a tenant, any new lease must comply with permitted use and all relevant zoning laws.
Business entities
When it comes to conveyancing for commercial properties, it can be a more complex task than residential conveyancing because often, the buyer of a building is a business rather than an individual. This means additional regulations must be followed as per corporate and business law legislation. In this case, it helps to hire conveyancing lawyers in Melbourne who also have on their team, competent business lawyers. At P&B Law, we have both types of lawyers available to help you navigate complex cases where commercial conveyancing intersects with business law. We can even help you set up appropriate business entities to purchase and sell commercial property. Choosing the correct structure for your business is one way to lower business risk and build your portfolio of protected assets.
Due diligence and GST
Perhaps the most time-consuming but essential part of commercial conveyancing is the due diligence required. Your conveyancing lawyers in Melbourne will research the property to find out if there are any claims on it, titles, encumbrances, environmental issues, or anything else that may get in the way of a transfer of title. GST is another concern during the conveyancing process and is often applicable on commercial property. Add an extra 10% onto the property’s sale price to get the actual cost. If you’re an investor, this tax can usually be claimed back. Speak to your tax accountant to understand how you can claim this amount and whether this applies to your situation. Also, a larger deposit of 30% of the purchase price is needed for a commercial property mortgage to be approved.
P&B Law – For All Your Conveyancing Needs
Suppose you are thinking of purchasing commercial property and you need conveyancing or even business law support. In that case, we can help you at P&B Law. Our experienced conveyancing lawyers in Melbourne will keep you informed every step of the way through the title transfer process.
Contact us today to benefit from our help, and do your due diligence for a great result.