Commercial Property – A Buyer’s Guide.

A Guide To Buying A Commercial Property

Commercial property (such as a warehouse, office building or retail space) is more complicated to buy than a residential property. In short, a buyer should expect complex contract terms, detailed planning information and additional legal and commercial implications.

As such, this article will set out some of the key issues in relation to buying a commercial property.

Contract for sale

The Seller’s lawyer will prepare the contract. It will set out the terms and conditions for the sale of the property. Essential terms will include a description of the property and the purchase price. It will also include a list of any fixtures or fittings included in the sale and the settlement date.

Furthermore, the contract will include detailed special conditions which relate specifically to the property and the terms of sale. An experienced commercial lawyer will examine the special conditions and provide advice to the purchaser.

To clarify, the sale of each commercial property is a unique transaction and general terms in the contract will usually be negotiated and varied by the parties.

Name of the purchasing party

In commercial sales, it is important to ensure that the contract correctly identifies the entity buying the property. For example, there are a number of different entities which can purchase commercial property. These include individuals, individuals in partnership, companies, trustees of discretionary trusts, superannuation funds or a combination of entities.

So, if you are thinking about buying commercial property you should speak with your accountant or lawyer prior to the purchase. Know which buying entity best suits your tax or asset protection needs.

If the sale is completed and you decide that someone else should own the property (for example, a trustee of a trust) then this will require a transfer of the property and payment of additional stamp duty and capital gains tax.

Goods and services tax

The sale of commercial premises will often attract GST. Furthermore, GST is applicable if a seller is registered or required to be registered for GST and operates an “enterprise”. A buyer that is registered for GST, can claim the GST component in their next business activity statement, however, will need to pay the money upfront to the seller.

There are some exemptions to the application of GST. For example, a seller does not need to apply GST if the property is part of a “going concern”. This might apply if the property is a business premises or a tenanted building. A seller may also be able to use the margin scheme to work out the GST that applies to the sale of the property. This detail will be in the contract.

In conclusion, seek advice about GST when buying commercial property. It will affect the amount paid at settlement.

Existing leases

The contract of sale will disclose any leases. If you are buying premises subject to a lease, you should have the lease reviewed by an experienced lawyer. This is because the specific terms of the lease can have an impact on the commercial viability of the purchase. For example, a lease to a poor tenant that is paying under market rent and for a lengthy lease term is a vastly different commercial proposition to a lease to a quality tenant paying market rent.

Due diligence

When purchasing a commercial property, complete the necessary searches and enquiries (including legal, physical and technical). For instance, these include rates and water search, title search, company search (if the seller is a company), a search of the contaminated land register and land tax search.

Therefore, a buyer should consider inserting a clause in the contract that states the purchase of the property is subject to the buyer being satisfied with due diligence.


To conclude, purchasing a commercial property is an important investment decision with significant financial implications. Therefore, a good lawyer can help you negotiate the sale contract and ensure that your interests are protected during the purchasing process.

If you or someone you know wants more information or needs help or advice, please contact us on 02 9955 6692 or email