Quick one regarding lease assignment

ceewash

I am hoping to sell my business. I have a full repairing lease which I want to reassign to buyer. I have always maintained inside the building and landlord outside and major things like boiler and electrics. My buyer will not want to take on the lease as our "understanding" is not written down. Is there a way round this without huge cost of solicitors? This could be a dealbreaker on the sale. LL does not want to change wording of the lease. Help please!

Savvy_Sue

Might the 'huge cost' of solicitors not be a lot less than either losing the sale, or getting this wrong? Especially if you only find out it's gone wrong a couple of years down the line ...

ceewash

Sorry it was the LL who said he did not want to pay soliciotors. He has since spoken to his and said he will not change existing lease. Is there a way of adding something to it? Ive read about something called Schedule of condition?

Mistral001

What is your "understanding" with the LL?

jjlandlord

ceewash wrote: »

Sorry it was the LL who said he did not want to pay soliciotors.

Obviously you would have to pay all costs... Likewise, you should factor in such costs when negotiating with your potential buyer.

I assume everything is in your own name, not in a company's name?
What exactly are you selling?

bris

It's pretty much essential that your buyer takes on the lease if the LL agrees which he doesn't have to if your buyer is higher risk than you.

You should realise that if the buyer doesn't take on the lease then you would have to sublet to him and you would need the sublet to be exactly the same terms as the original or you become liable for anything negotiated out of the sub lease.


The LL does not and it's not in his best interests to make any alterations to the lease that would weaken his position.


If the buyer doesn't want to take on the lease then you really need to find a new buyer, taking on the lease is pretty much a given when taking over a new business or a sublet at the same terms very least. Remember though with a sublet you still pay the LL whether your new buyer pays you or not, you really do need legal advice.

CKhalvashi

On top of what Bris says, the LL may be willing to negotiate if security is offered from the buyer.

I offered a PG when we took on the lease for the current office unit about 3 years ago, and it was accepted on those terms. I know the seller had no PG, but had also fallen short with the rent before (we were buying the lease on the unit, not the sellers business), so this put their mind at ease significantly.

paddyrg

Looking at it from the other end, the buyer can't be sure he's not signing a lease obliging him to complete lots of expensive repairs which you could be selling the business to escape from. You could still a sublease, but would suggest taking legal advice and working out a premium for you insuring the major repairs if the freeholder doesn't carry on in the same vein.

Similarly, by the way, you'd be up the creek if the freeholder sold the property and the buyer (rightly) went by the letter of the contracts.

Savvy_Sue

Savvy_Sue wrote: »

Might the 'huge cost' of solicitors not be a lot less than either losing the sale, or getting this wrong? Especially if you only find out it's gone wrong a couple of years down the line ...

And I think you've had a number of suggestions as to precisely how this could go wrong a couple of years down the line.

ceewash wrote: »

Sorry it was the LL who said he did not want to pay soliciotors. He has since spoken to his and said he will not change existing lease. Is there a way of adding something to it?

You will only be able to change it or add to it if the LL agrees. I guess it's possible he may either agree or not object to a letter setting out the way things have been done so far, but it won't have any legal standing, by the sound of it.

ceewash wrote: »

Ive read about something called Schedule of condition?

As I understand it, a schedule of condition sets out how the property is when a new lease starts, and the leaseholder agrees to return in at least as good a condition. However with a full repairing lease, the LL could ask for the premises to be returned 'fully repaired'. You'd then turn round with your schedule of how things were when you moved in and say "Not reasonable, I've done X, Y and Z, so things are better than they were." Then you haggle.

the LL isn't willing to put anything extra in writing or change anything, but is he proposing to continue dealing with anything outside or 'major'?

Pennywise

You have to ask yourself "what's in it for the LL"? Why should the LL accept incurring costs or reducing his strong position for your benefit? At the end of the day, "you" are holding the current lease, including it's liabilities. If "you" want to transfer it, then it's a matter between you and the buyer as to who is liable for what. Unless the LL agrees to a change, it's you he'll come after for future rents, maintaining the property, and it being in the right state and condition when it's finally handed back to the LL. You should be able to sub-let, but if the buyer doesn't abide by the terms of the lease, it's you who the LL will come after. You will be the one to benefit from finding a buyer to take it over, you will be the one to benefit if the LL agrees to removing your obligation to keep it maintained, so really, the legal fees etc for all parties are down to you I'm afraid.

ceewash

Thank you for all the replies. Just to update. LL states that if I agree to pay a certain amount for each year I have been there towards depreciation (not settled on an amount yet) then the lease can transfer and the new person starts with their own schedule of condition. I realise now that I should have had a schedule of conditon when I took the lease, but was too naive in such matters. Does anyone know how this depreciation figure would be calculated? Any guess of the amount?