Key documents to obtain on the purchase of manufacturing or warehousing premises.
These documents will usually be provided to a purchaser’s solicitor as part of full replies to enquiries from the seller. This list is by no means exhaustive but highlights several of the key documents you should expect to receive.
Owners and/or occupiers of commercial property are required to comply with the Control of Asbestos Regulations 2012 as duty holders. A duty holder must assess whether a property contains asbestos and put in place a management plan where asbestos is present or liable to be present.
By obtaining a copy of the seller’s asbestos survey and any management plan on an acquisition of new premises, a purchaser can assess the extent of any asbestos and consider how this would impact their proposed use of the building. It could be that any works required to repair a building prior to occupation will need specialist asbestos contractors’ involvement increasing projected costs or occupation and use of the building by employees will require a management plan to be put in place to comply with an employer’s basic duty to prevent or reduce exposure to asbestos-containing materials.
EPC and Recommendation Report
If a building uses air-conditioning, heating or ventilation then an Energy Performance Certificate (“EPC”) will be required for the property in almost all circumstances. An EPC provides the asset rating for the Property which is the theoretical energy efficiency of the building without consideration of the occupier’s use. An EPC is supported by a Recommendation Report of works and measures which can be incorporated into a property to improve its energy efficiency. The potential costs of these works could be considered by a purchaser before proceeding to exchange contracts.
For a business acquiring a property with a view to letting it, whether as an investor to a tenant or pension fund to the trading business, the granting of a lease will trigger the requirement for an EPC providing an asset rating. Currently, it is unlawful to grant a lease of commercial property of business premises with an asset rating lower than an E rating unless it can be registered on the PRS Exemptions Register. Obtaining the EPC as part of the purchase could reveal a potential issue with the asset rating requiring significant expenditure to improve the rating such that the proposed structure for the purchase may need to be reconsidered.
Fire risk assessment
Obtaining a copy of the seller’s fire risk assessment will help establish whether any works and measures are required to the Property to ensure current compliance with the Regulatory Reform (Fire Safety) Order 2005. The Order requires property owners and employers to carry out the risk assessment and keep it under review, provide measures for fire-fighting and fire-detection and ensure that the premises, fire safety equipment and any emergency routes are maintained in working order.
Any recommendations within the seller’s fire risk assessment will provide a purchaser with an idea of the likely cost required to bring a property up to compliance with the Order. The seller’s fire risk assessment is highly unlikely to be suitable for a purchaser as it was prepared for the seller’s occupation, but it will help prepare a purchaser’s own risk assessment.
Electrical Installation Condition Report
Requesting a copy of the seller’s current Electrical Installation Condition Report will reveal whether the fixed wire installation at the Property is in good working order and satisfactory for continued use. The Report will provide recommendations where required for works to be carried out to improve the installation and make it safe for occupiers. By obtaining a copy of the Report, a purchaser can assess any unexpected costs which may need to be incurred immediately to make the electrical installation safe.
A purchaser of new manufacturing premises should ensure that they obtain these documents to help prepare for day 1 compliance with their statutory obligations. They can also help assess the potential costs and liabilities for any unexpected works that may be needed to a property that was not considered as part of any offer made to the seller, opening the potential for negotiations on the price. If you are considering purchasing or selling industrial property, contact the Commercial Property Team at Keebles for advice.