The Landlord and Lease Contingency in Selling a Business
Clear A New Lease With The Landlord Before You Sell Your Business.
A lease is a contract that represents the right to operate a business from rented premises. It is a legally binding contract between the landlord and the tenant. It sets out the terms, conditions and rights as well as the obligations of both parties in relation to the occupancy.
Before selling a business make sure the lease can be transferred or renegotiated. You want to get this part of the sale process done relatively early. Landlords don’t like surprises. A deal can fall apart quickly if a Landlord is informed at the last minute that a new owner is about to take over the current business. It is better to work with the Landlord to iron out the details before you get too far into the deal. Determine the Landlord’s willingness of renewing or transferring the lease to a new owner and what qualifications of such new owner are expected.
Also of importance is how much time is remaining on the lease and whether there are any extension periods. The purchaser would want to evaluate the lease to determine what impact it might have on the future viability of the business.