If you are buying or selling a business that leases premises, the Lessor (Landlord) must approve the Purchaser before they agree to assign the lease over to them.
The landlord’s mortgagee may also need to give approval. As well as, lessors of any key equipment being sold with the business.
The Landlord (and other parties) also want to be reasonably satisfied the Purchaser is of good financial standing and has capacity to continue paying rent. Naturally.
Follow these tips for a smoother transaction and save potential disappointment, time and costs, for all parties:
- Ascertain, at or before signing the contract, what sort of financial and other information the landlord and other parties will require to make a reasonable assessment of the purchaser, to approve the lease being assigned to the purchaser;
- Obtain approval from the lessor’s and lessor’s mortgagee’s before any other conditions are satisfied (this could save money and professional fees, if the approval does not issue);
- Aim to have the Purchaser meet the landlord as early as possible, in the negotiation, so that the landlord can make a first-hand assessment of the prospective purchaser;
- The purchaser is required to pay the legal fees of the Landlord and other parties for approval and assignment of the lease.They can often total $2,000.00-$3,000.00. Find out these costs as soon as possible because they are payable, at or before settlement;
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