When selling a business in Queensland, one of the key steps is to assign your existing lease to the buyer (except for when the buyer is negotiating a new lease themselves or if there is no physical premises). A valid lease is critical for many businesses and it is therefore important to ensure that a valid assignment occurs. Without a valid assignment, the buyer may not be able to legally occupy or operate from the premises.
The first step is to review the existing lease terms to understand what obligations you are subject to. Most leases require the landlord’s written consent before an assignment can take place. As the lease usually dictates the terms of the landlord’s consent, it is important to thoroughly review the lease. Failing to do so could result in you being subject to obligations that make the assignment of the lease impracticable.
The landlord may require you to return the premises to their original state and you may also be required to pay back any incentives that the landlord has provided you. The landlord usually will also require details from the buyer including their financial position, experience, and proposed use of the premises. The landlord is entitled to assess the suitability of the incoming tenant and may impose reasonable conditions before giving consent, such as payment of their legal costs or requiring personal guarantees.
Once the landlord’s consent is obtained, the parties will enter into a Deed of Assignment that reflects the agreement to assign the lease. This document formally transfers the lease obligations to the buyer from the date of settlement.
In short, when selling a business, assigning the lease is a critical part of the transaction. You should look to obtain legal advice to ensure that you know your obligations and that your rights are protected. At McNamara Law, we can assist you with the entire business sale process, including the assignment of a lease.
Unit 10
88 Limestone St
Ipswich 4305
Queensland
Ph: 07 3816 9555
GE Building,
Level 1, 6 Yoga Way
Springfield Central 4300
Queensland
Ph: 07 3470 3600
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