Choosing the right solicitor is very important when you invest in industrial real estate. Even if you have an excellent relationship already in place with a family solicitor, it doesn’t always follow that they are experienced with:
– industrial sales and purchase contracts, and/or
– tenant leases
If this is the case for you, ask your industrial real estate agent or family solicitor to recommend a firm with experience in Industrial Real Estate.
This is why you need the right solicitor when purchasing an industrial property.
Negotiating The Purchase
When you purchase your investment property, the agent will have negotiated with you, on behalf of the owner, not only the purchase price, but any other special conditions. These conditions can include, for example, requesting certain repairs to the property before purchase, or negotiating the length of the settlement period – that is, the time between paying the deposit and settling the balance of the purchase price.
Purchasing With A Tenant In Place
It is not uncommon that a property for sale will already have a tenant installed. On occasion, the property you wish to purchase may have a tenant whose current lease is about to expire in the short term (within the coming eighteen months is considered short term). This is an opportunity to submit your offer subject to the tenant’s entering into a new lease of at least three years. The agent should negotiate the new terms of the lease and have it signed by the tenant before you pay your deposit and sign the purchase contract.
Title Searches And Preparing The Contract – Your Solicitor
The sales agent now sends the sales advice to the solicitor, who conducts a title search. This is a legal requirement – a copy of the title must be attached to the contract. The importance of a title search is three-fold – not the least of these being to prove that the seller is indeed the owner of the property! It also identifies any defects in the title that may affect value. Examples could be that the Roads Department is about to take the front of the property for road widening purposes. Or a public utility, such as an electricity provider, has a legal right to cross or otherwise use someone’s land for a specific purpose. That exact scenario has happened to me on one occasion, and it highlights the need for a trustworthy agent and competent solicitor.
The title search also reveals if there is a mortgage over the property. Your solicitor will want to know this so that they can ensure any monies owed to a lender are paid back and the mortgage removed from the title before completing the settlement.
Once the searches are complete and the sales contract is prepared, your solicitor will call you, the purchaser, to go through the contract with you, ensuring you understand all clauses.
Signing And Exchanging The Contract
Both parties now sign the contract. The purchaser pays the deposit; a ten per cent deposit is typically requested, but is more commonly negotiated down to five per cent. When both parties have signed the contract, the contracts are exchanged. This means that the seller’s signed contract is held by the buyer’s solicitor, and the buyer’s signed contract is held by the seller’s solicitor. The deposit is held in the agent’s trust account until settlement.
Once the agreed settlement period has elapsed, the purchaser pays the agreed sum, less the deposit, to her solicitor, who ensures any mortgages on the property have been fully paid back. Evidence of the mortgage discharge is received by your solicitor before any remaining funds from the sale are released to the seller.
The sale is now finalised, and the keys to the property are given to you, the new owner.
A SOLICITOR IS 1 OF 5 IMPORTANT PEOPLE YOU NEED IN YOUR CORNER WHEN YOU ARE LOOKING INTO BUYING AN INDUSTRIAL PROPERTY, AND IT’S IMPERATIVE THEY HAVE AN INDUSTRIAL EXPERIENCE.
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