Purchasing Commercial Properties

THE PROCESS

BUYING COMMERCIAL PROPERTIES

WHAT DO I HAVE TO DO NOW THAT I’VE COMMITTED TO BUYING A COMMERCIAL PROPERTY?
STEP 1

INITIAL CONTACT & COMMUNICATION


  • An offer to purchase is prepared and delivered to the sellers.  Your real estate agent handles this step.  If the buyers have no agent, you should engage us to prepare the offer for you
  • After acceptance by the sellers, you attend to satisfying their conditions (securing financing, a building inspection, insurability, review of leases and rent rolls, environmental assessments, etc.).  You may wish to have us review the leases for any legal issues
  • Once the conditions are satisfied, the purchase contract becomes “firm” (goes ahead).  The real estate agent or you send us the purchase contract documents (unless we were involved with the purchase contract)
  • We contact you by phone, email or meeting to confirm the engagement.  We discuss the nature of the purchase and your future plans for the property.  We also discuss the scope of the tasks you would like us to handle
  • We send you a detailed letter covering the following:
    • Confirmation of the major terms of the purchase contract
    • Explanation of the anticipated expenses and other costs for budgeting purposes
    • Explanation of the steps involved including our tasks and your tasks and the anticipated timing for compling the various steps
    • Information we need from you
    • Other information we’d like you to know

STEP 2

LAWYER’S SEARCHES


  • We obtain and review a full search of title to the property to ensure you will obtain valid legal title to the property, free of legal defects and claims against the title.  Any problems are brought to the attention of the seller’s lawyer for them to rectify.  We notify you about any utility easements, restrictive covenants and rights of way affecting the property (unusual items are brought to your attention immediately; standard items are communicated at the pre-closing meeting)
  • We order title insurance AND/OR secondary searches such as zoning compliance, outstanding building permits and work orders, encroachments (if there is a survey), fire department work orders, property tax and water arrears, etc.  The degree of coverage title insurance provides on commercial properties depends on the purchase price.  We discuss with you the advisability of obtaining title insurance and/or certain secondary searches on a case by case basis and you provide us with your instruction on how to proceed.

STEP 3

DOCUMENT PREPARATION AND COORDINATION


  • We receive mortgage instructions from your lender and prepare mortgage documentation for you to sign
  • We arrange for mortgage funds to be sent to our trust account on the day of closing
  • We prepare other documentation for the transfer
  • We obtain confirmation of fire insurance from your insurance agent
  • We notify the tax and water departments of the closing so they can arrange for a meter reading and changeover of accounts. You notify the other utilities that are applicable to the owner/landlord (gas, electricity, cable. etc.)
  • You register for HST in order to avoid paying HST on the purchase price and because any commercial rents you collect will be subject to HST

STEP 4

PRE-CLOSING MEETING


  • We contact you a few days before closing to notify you how much money to bring in, who to make it payable to, other things to bring and to schedule a meeting
  •  We meet with you before closing (usually 1-2 days before closing):
    • Photocopy your ID (a legal requirement)
    • Review the financial documents (detailed summary of money coming in and going out of our trust account)
    • Review, explanation and signing of transfer documents
    • Review, explanation and signing of mortgage documents
    • Explanation of the closing process and when you might expect to get keys

STEP 5

CLOSING AND REPORTING


  • Mortgage funds and your money is deposited to our trust account and we obtain certified cheques at our bank
  • We transfer funds and send other documents to the seller’s lawyer / receive keys and other documents from seller’s lawyer
  • Electronic registration of transfer and mortgage in the Land Registry system, making the transfer of ownership complete
  • We contact you immediately; keys become available for pick up at our office unless they are left on site in a lockbox
  • We sends our final reports to you, the lender and the title insurance company (a few weeks after closing)

BUYING A HOME IS ONE OF YOUR BIGGEST DECISIONS IN LIFE. LET US GUIDE YOU THROUGH THE PROCESS.