A Distinction-level comprehensive set of study notes covering the Advanced Commercial Property module on the LPC. It is designed to be direct and to the point by covering the technical aspects in a practical sense. Each part of revision notes can be applied directly to exam questions on each topic...
Advanced Commercial Property
Part 1 Revision Notes
Part A: Pre-Contract Searches/Inquiries regarding the title plan and office copies
Searches to always make:
• LLC1
o Listed buildings
o Conservation areas
o Tree protection order
• Official Copies of Title
o Rights benefitting and burdening each land
o Charges
o Owners
o Boundaries
• CON29
o Planning issues
o Access
• CON29DW
o Drainage
o Water supply
o Pipes
• CON29O
o Ask optional questions
▪ E.g. do people have the right to move through the land?
• Company Search
o Against the seller for insolvency and funds
▪ Especially important if seller is taking a lease
• Environmental Search
o Where is the property situated? Near a river? Mining area? Etc
o Pollution
o Contaminated land
• Physical inspection
o Boundaries
o Vacant possession
o Overriding interests
• Survey
o Whether it is suitable for development
• Coal Mining/Brine Mining Search
o Could impact stability of the land for development
o Location is key e.g. Cheshire/Nottingham/Derby
• Highways Search
o Ransom strip? This is key
,There was then an in depth look at each Official Copy with a particular focus on certain ones – each
issues such as:
• Restrictive covenants qualified by needing consent
• Not putting anything in the river that is injurious
• Contributing to maintenance/installation of pipes
• Restricting use of property
• Maintaining a pylon
• Mines and minerals – if this info has been excepted then it is safe to get insurance
• Leases – to who? Terms? Rent review? Compliancy with covenants? Need vacant possession
• Access to land via rights of way – does this right exist? In what capacity e.g. vehicles/footpat
Based off this information from the title – besides pre-contract searches, what other information
of view?
Example:
Restricted use - Were any consents provided? Was it insured against?
Putting something injurious in the river – was anything put in?
Maintaining the pylon/pipes – has this been done? Is it linked to the property we are buying i.e. are
Leases – vacant possession will be needed
Importantly – think laterally – will this impact development?
What will be done between exchange and completion regarding Estate Management?
The idea of this part of a transaction is to mainly protect the buyer in certain events.
SCPC 6.1 to 6.1.8: Rent Review
If a rent review period is upcoming between exchange and completion – this part of the SCPC will n
buyer is involved throughout the process i.e. rent review needs consent from the buyer and the sel
SCPC 6.2: Lease Renewals
The seller will carry these negotiations with the tenants until completion and then the buyer takes
buyer and seller must be working together just like under the rent review section specifically the co
SCPC 8: Risk and Insurance
The sale contract should deal with the issue of what happens if the property which is being sold is d
completion. It should address the following issues:
• which party should bear the risk until completion (i.e. should the buyer be obliged to comple
damaged significantly between exchange and completion or can it rescind); and
• whether or not the seller should insure the property until completion.
The Buyer would usually insure on exchange but if there are existing tenants (which will be the case
obliged to insure against the leases paid for by the tenants via service charge/insurance premiums.
,Part 2 Revision Notes
Contract Issues
These notes will look at how to:
• Examine and advise upon the terms of an acquisition contract.
• Interpret, apply and provide advice upon the Standard Commercial Property Conditions (3rd
• Provide appropriate advice.
• The seller’s solicitor drafts contract and incorporates the SCPC with various omissions and am
Regarding Commercial Property Deals these are the key things to look out for when looking at the d
perspective:
• 10% deposit held as stakeholder (interest accrued paid to the buyer at completion)
• Vacant possession
• Contract must explicitly deal with VAT otherwise it will be standard rated at 20%
• Preventing buyer from assigning benefit to 3rd party
• Seller has the right to sell/rescind before the sale if buyer goes bust
• Contract should state that the buyer will not be covering sellers fees
• If PP already exists then seek to get a license from seller/architect to get copyright permissio
can begin
• Overage needs to be considered
o Issue with overage is when the payment will occur i.e. the trigger event
o Seller will want it when the value of the property goes up whereas the Buyer will want
actually realised
o There needs to be a time limit e.g. 5/10/15 years
o Amount of the overage?
▪ % of increase in value of the property; or
▪ % of profit made; or
▪ % of profit if it exceeds a certain amount; or
▪ % of price of units of it exceeds a certain amount.
• Security of the overage (i.e. how payment is secured) – check other overage A3 notes
• Consider including Clause 6 SCPC regarding Rent Review when leases are involved so buyer is
• Consider a conditional agreement if PP is not confirmed yet
• Consider including SCPC 5 so if existing lessors want to assign the buyer is kept involved
• Incorporate Clause 8 SCPC so sellers insure property till completion due to existing tenants
Part 3 Revision Notes
Overage and Option Agreement
Overage is the term used to describe a payment which is made by a buyer of land/developer to a se
price. The additional payment is usually contingent upon a future event occurring such as the grant
permission and is therefore made sometime after completion. The additional payment is calculated
outcome of the development is certain.
, • What happens when there is no agreement? Adjudication!?
Buyers Perspective:
• SDLT – overages makes this more complicated and another payment for SDLT may be neede
• Sellers lien – this exists when the overage payment is unpaid (i.e. seller gets control over pro
• Time period – there needs to be some cut off point usually 3-5 years
• Buyers Mortgagee- if B is already using a mortgagee they need consent for future overage pa
developments
Sellers Perspective:
• Alternative use – what if planning permission is given for something that was not part of the
needs to be covered.
• Notification – buyer must notify when it does things that may trigger overage
METHODS OF SECURING OVERAGE PAYMENTS AND THEIR ADVANTAGES/DISADVANTAGES
1. Promise to pay
The buyer provides a contractual promise in the sale contract to pay any overage due without any
Advantages:
• It is straightforward and therefore cheap.
Disadvantages:
• It creates no interest in land and will therefore not bind successors in title to the land.
• The buyer may not be worth suing if it breaches the contract.
• It may need to be backed up by a bank guarantee, which can be expensive for the buyer (it w
obtain the guarantee).
2. Legal Charge
The buyer's obligation to pay any overage due is secured by the seller taking a legal charge over the
overage payment is not made as agreed, the seller can exercise its power of sale over the land and
the sale proceeds. To be effective, the charge must be registered at Companies House within 21 da
the relevant priority period.
Advantages:
• The charge creates an interest in land which can bind successive owners of the land - this wo
preferred option where the buyer has no mortgage.
Disadvantages:
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