Commercial Lease - Landlord and tenant

Brothwood

Hi

We are in the process of getting a commercial mortgage on an existing business and the whole world seems to be against us!

The latest problem is the lenders solicitor has asked for a commercial lease as we will be a limited company (which we were recommended to do) but will be purchasing the property in our names. We will effectively be running the business as tenants and paying rent to us as the landlord.

Why do we need a commercial lease agreement if we are renting from ourselves? We're not going to fall out with ourselves and take ourselves to court! Is this a mistake?

We are at our wits end and can really do without amy more delays and having to pay for additional, and possibly unnecessary, work.

Any and all advice is very much welcome. If you need more details let me know.

Thanks

Mark

davidmcn

If your company is renting from you as individuals then the lease is the thing which documents that arrangement. Or are you confused about why you're entering into that arrangement at all? Who is the bank lending to - you as individuals or the limited company? Don't you have a solicitor explaining this stuff to you?

amnblog

Bit confused as to what you are arguing about here Mark.

If your Limited Company is leasing the property then a properly draw out lease agreement will be required. This is standard Practice. Your business should also expect to pay the going market rate on the lease.

You are one legal entity and your business is another. You cannot have a 'gentlemen's agreement', between yourself and a limited company even if you own it.