Selling Commercial Property
Divesting a commercial property requires detailed legal structure. From auditing vendor warranties and navigating GST Compulsory Zero Rating (CZR) rules to drafting complex settlement statement apportionments, we protect your transaction value.
Request a Conveyancing QuoteVendor System Warranties
Under Clause 9 of the standard ADLS Commercial contract, the seller warrants that all building systems (such as air conditioning, fire sprinklers, and security alarms) are fully functional at settlement.
GST CZR Rules & Mortgage Discharges
GST Schedule 1 Seller Filings
As a seller, you must complete the GST Schedule 1 details in the ADLS contract to declare your GST registration status. If both you and the buyer are registered, the transaction qualifies for **Compulsory Zero Rating (CZR)**, taxing the sale at 0% GST.
**The Seller's Trap**: If you declare the sale is subject to CZR but the buyer fails to provide a valid GST registration at settlement, you as the seller can be held liable by the IRD for paying 15% GST on the purchase price. We draft strict indemnity warranties forcing the buyer to pay any tax penalties resulting from their registration failures.
Discharging Commercial Mortgages
If your commercial building has registered bank securities, we must release the mortgage on title before transferring ownership to the buyer. This process is managed electronically on the LINZ Landonline platform:
- **Payout Calculations**: We request a formal loan discharge figure from your bank's commercial operations division.
- **Escrow Settlements**: On settlement day, we direct the buyer's funds to pay off your loan balances directly.
- **Security Release**: Once funds are cleared, the bank releases the mortgage, allowing us to submit the electronic e-Dealing transfer.
Instruct Quay Law to Manage Your Commercial Sale
Ensure your vendor warranties, outgoings statements, and GST zero-rating structures are drafted by experienced property solicitors. Request a quote online today.
Request a Conveyancing QuoteFrequently Asked Questions
A settlement statement is a financial ledger prepared by the seller's lawyer detailing the final balance due from the buyer on settlement day. It lists the purchase price, deducts the initial deposit, and adds or subtracts apportionments for council rates, tenant rent paid in advance, water utility arrears, and body corporate levies.
Yes. Real estate agency commissions are professional services, not property sales. Even if the property sale is zero-rated for GST, the agent's commission will attract the standard 15% GST. Because you are GST-registered, you can claim this GST portion back in your next GST return to the IRD.
If you hold a cash security bond paid by the tenant in your business account, this bond must be transferred to the buyer on settlement day. This is executed by showing the bond as a debit/credit item on the settlement statement, deducting the bond amount from the funds the buyer pays you. The buyer then holds the tenant's bond under the terms of the assigned lease.
Discuss Your Commercial Transaction
If you have an urgent contract review, an upcoming auction, or require advice on wills and trusts, contact our Remuera office. You will speak with a solicitor, not a call centre, and we will tell you honestly how we can help.