You have been contacted by your commercial tenant who has operated their business from your premises for a number of years, to advise you that they are selling their business or have sold.

It is a common practice in the commercial real estate arena and something that often occurs when your tenant is savvy and operates successfully. The tenant may decide to sell for a number of reasons including but not limited to their own retirement, a career change, or wanting to cash out on something that is operating so well.

As the Landlord, this can be a disappointing turn of events, but one that must be actioned diligently.

Do I have a choice who buys the business?

A commercial lease agreement and more importantly legislation, does not allow you to unnecessarily withhold consent to a transfer of the lease to another party,  however, you are entitled to perform a number of commercial and credit checks as we discussed in a recent article regarding new tenancies. This allows you to establish the purchasers ability to continue to operate the business successfully, and ultimately fulfill the requirements of the lease such as payments of rental and outgoings.

A transfer is performed

A transfer will often be performed by solicitors representing both the purchaser and vendor of the business with the Landlord counter-signing at settlement. This allows the Landlord and their agent to ensure all monies are paid, the premises is handed over in good condition, and to prevent any hiccups arising shortly after settlement. The representing solicitors will also handle items such as adjustments and variations to the existing lease, all of which are considered and approved by the landlord before being implemented into any documentation.

Who bears the cost?

So who pays for all of this? In the case of a lease transfer the associated costs are borne by either the purchasing party or the vendor, but this depends on the documentation and any negotiation that took place as part of the business transaction.

Should your tenant be involved in any such action, please feel free to contact the First National Commercial Neilson Partners team who are more than happy to talk this through further with you.

As always, should there be any legal queries you have please contact your solicitor.