YOUR PROPERTY, OUR PRIORITY: GUIDING OUR CLIENT TO A BALANCED AND FAIR COMPLETION

We recently acted for a buyer of the freehold interest in a multi-let commercial industrial estate. The property due diligence revealed that the recommendations from the fire risk assessments (FRA) had not been carried out. The seller argued that the burden of complying with the FRAs was down to each occupying tenant under their respective leases and therefore would not go to the expense of implementing any recommendations arising out of the FRAs. 

The Challenge

We were clear that the remedial steps should be arranged by the seller at their cost, not the incoming buyer. However, the seller was reluctant to proceed on this basis.

Our Approach

We advocated strongly on behalf of our client, setting out that:

• the recommended fire safety measures arose from the property’s existing condition under the seller’s ownership.

  
  

• it would be unreasonable for the buyer to bear the cost of compliance works relating to a period of ownership prior to their acquisition.

  
  

• our client’s lender would not lend without the remedial works having been undertaken.

  
  

We liaised with the lender and the seller’s representatives to ensure all parties understood the proper allocation of responsibility.

Outcome

We successfully secured agreement that our client would not be required to undertake the fire risk assessment recommendations before completion. The responsibility remained where it belonged, with the seller, and the transaction was able to move forward on a fair and commercially sensible basis.

Key Takeaway

This matter underscores the importance of doing your homework prior to listing your property for sale. Sellers should make sure they have complied with all statutory obligations for commercial property, failure to do so will inevitably lead to wasted costs and delays or worse a breakdown of the transaction.

If sellers are not prepared to make concessions on price or offer other incentives they must take steps to review and rectify defects in due diligence before listing the property.

Harshinder Hundal is a Commercial Real Estate Solicitor in Northampton and advises on Lease Management and Property transactions.

Contact Harshinder Hundal on 0808 172 93 22 for Commercial Real Estate advice or complete our quick contact form  for a no obligation discussion.

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  This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.