ILA You Need Before Signing a Contract for Buying Commercial Property

At a Glance

Buying a commercial property involves complex legal and financial risks. ILA for commercial property purchase can help businesses and investors understand their obligations more clearly, helping you avoid misunderstandings about key terms and obligations. iLA provides legal advice for buying a commercial property and helps you understand any liabilities or obligations before you sign.

The Importance of ILA for Commercial Property Buyers

Business owners and investors make a significant financial commitment when they buy a commercial property, be it an office space, a warehouse or a retail unit. However, commercial property contracts often contain technical terms and complex clauses disguised in legal jargon, making it difficult to fully comprehend financial risks and obligations. For this reason, many lenders and solicitors request ILA before completing a commercial property purchase, especially where security or guarantees are involved.

When you take ILA for buying a commercial property, you gain a better understanding of the risks involved in signing a commercial contract. This is especially crucial if you’re signing a personal guarantee for a business loan, which may put your personal assets at risk in the event of default or insolvency.

Lenders recommend independent legal advice for property buyers, especially for high-value commercial property transactions, stemming from case precedents such as the Royal Bank of Scotland plc v Etridge (No 2). This helps ensure that property buyers fully understand the nature and effect of the contract.

In this article, we discuss the importance of ILA for commercial property purchases and why it's an essential requirement before signing a contract.

Why You Need ILA Before Signing a Commercial Property Contract

Commercial property contracts operate on the principle of ‘caveat emptor’, or buyer beware, which requires businesses or investors to exercise due diligence. Independent legal advice plays a huge role in ensuring that property buyers are under no duress or undue influence while signing contracts.

This protects the lender’s security interest where the contract involves assets tied to a loan to make a commercial property purchase, while ensuring the contract is enforceable. For businesses, independent legal advice on property purchases can help with informed decision-making and ensure you understand any personal liabilities or financial obligations involved which may carry serious long-term implications.

Key Risks ILA Helps You Identify in Commercial Property Deals

ILA for a commercial property purchase involves a solicitor explaining the key legal and financial implications outlined in the documents. For example, if a business is buying a commercial property on a personal guarantee, an ILA would explain the risks that typically accompany signing commercial contracts. This includes understanding that personal guarantees would bypass the limited liability protections businesses usually have under the Companies Act 2006.

Another key risk an ILA helps with is understanding the ‘all-monies’ clause. Here, lenders can demand repayment of any debts owed to them under a guarantee, even if the loan is separate and not linked to a commercial property. Buyers unaware of the risks of signing a commercial property can easily overlook this tricky clause, which can expose them to multiple liabilities.

ILA solicitors will also provide businesses and investors with legal advice on warranties within a legal charge. This helps you gain clarity around your obligations and the potential consequences if a warranty is breached.

What to Expect During an Independent Legal Advice Consultation

Online ILA consultation providers like iLA provide up-to-date legal advice quickly and efficiently, meeting the same stringent regulatory requirements as an in-person solicitor meeting. Solicitors will meticulously review all contract and security documents pertinent to commercial property purchase, giving unbiased advice to ensure you fully understand the terms and implications.

Each legal clause will be explained in detail, highlighting the risks of non-compliance and how security may be enforced under the contract. The solicitor will also ensure that a client has fully understood the risks of signing the commercial contract and is acting of their own free will.

The client’s confirmation is then recorded in an ILA certificate, which serves as proof of consent. This becomes evidence that the terms and implications were explained to you before signing.

Choose iLA for Independent Legal Advice on Commercial Property Purchases

Now that you know about the importance of ILA, why not book an ILA consultation with us to understand the risks of signing commercial contracts better? We’ll explain all you need to know in plain and simple terms so that you’re well-informed.

We’re one of the leading independent legal advice (ILA) providers in the UK, offering specialist advice in property and finance areas. From development finance and personal guarantees to mortgages and the transfer of equity, we’ve got you covered.

We offer you a fully digitalised process, making our ILA convenient and accessible. You can easily book an appointment with us and arrange for an online video call consultation from the comfort of your office or home. We offer a no-fuss, fully transparent pricing model based on your urgency, which is disclosed to you upfront.

Ready to receive clarity and understand your obligations before you commit? Call us on 020 4571 9207 to discuss your requirements.

The information in this blog is general in nature. It is not intended as legal or financial advice. You should always obtain professional advice before making decisions based on your own circumstances.