As part of selling your business, you may have a commercial lease tied up in the sale. Often this is one of the most overlooked barriers to completing a deal.
If a business has leased property, it is likely that the consent of the landlord will be required for the lease to be assigned to the purchaser. You need to consider the implications of potential refusal by the landlord to consent, or a delay by the landlord in consenting and what effect it will have on your plans to sell the business.
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The business lease approval
When a business is sold the buyer must be approved by the landlord to be granted an assignment or a new lease. Landlords often want the new buyer to have a good credit history and may want to see financial reserves for the buyer to be able to pay the rent for a certain period of time.
With regards the sale of a business, it is imperative to ensure that the business lease is also transferred at the same time otherwise the result will be that the buyer owns the business, but the seller is still legally tied to the lease. You should seek professional advice on the process so as the sale can go as smoothly as possible.
Requesting the Landlords Consent
When applying for the landlord’s consent to transfer a lease it is vital that you follow the correct procedure. There have been cases where an email was sent thinking it a suitable method to make contact when it was not. To avoid getting this wrong, the lease should always be checked for its notice requirements. Speak to us to find out more information.
Granting landlord’s consent
The law in some cases allows a tenant to proceed with an assignment without the landlord’s consent where a landlord ignores its statutory duty to consider the consent beyond a reasonable time. However, you should always speak to an experienced lawyer about your circumstances before proceeding.
You should ensure that consent is obtained in a timely manner and any proposed deadlines for completion should be discussed in advance with your legal team and the buyer.
Legal difficulties
If a lease assignment takes place without the landlord’s consent, the previous tenant can be held responsible for the terms of the business lease. This means if the buyer stops paying rent, the landlord can pursue the previous tenant for the rent arrears.
If you are seeking to sell your business and transfer any lease, contact our commercial property team who can guide you through the procedures and process step by step.
How we can help
Using our experience and wealth of knowledge, we are able to offer expert advice on selling a business with a commercial lease, based on your individual requirements.
We are able to explain clearly the legal issues and provide open, honest and professional advice, plus a range of funding options.
How to make contact
To speak to our commercial property solicitors today, simply call us on 0161 929 0121, or allow a member of the team to get back to you by filling in our online contact form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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