A business sale with leased premises can add an extra dimension to the sale of the business.
Many businesses are dependant on the leased premises to continue , this is especially relevant to retail stores as location is such a key factor. Equally the cost of relocating for warehousing or manufacturing may make the current business premises necessary for the sale of a business.
When should I tell the landlord I’m selling my business?
Once your business is on the market and negotiations have proceeded you will likely move to the contract phase.
We are often asked “when should I tell my landlord I’m selling my Business” in our opinion you need a signed Agreement of sale for your business in place.
Do not approach the landlord regarding the assignment of the lease until you have a price and terms agreed with a potential buyer of your business and have a signed agreement and deposit is being held.
It may seem logical that the purchaser would want the lease assignment completed or approved prior to signing a sale agreement. The problem is until all terms and the sales agreement or contract are signed off the purchaser may not proceed and altering the landlord to the potential of a lease assignment can in some cases cause issues. Generally the sale agreement would be signed “Subject to” the lease assignment and the purchaser would most likely be able to with draw and have their deposit returned if the lease couldn’t be assigned.
Assuming the Business Sales Agreement is signed and deposit is being held (normally in trust) now is the time to approach the landlord.
There is a specific process to follow and there are time frames that the landlord is permitted to take to respond , in Victoria the landlord has 28 days to consider the request to transfer.
Consumer affairs Victoria can provide information on lease assignments.
There is information that can be provided to a landlord for a business sale with leased premises that can smooth the way.
We have a package we prepare for commercial property lease assignment so we’d be happy to help you. Selling a business with a lease can be daunting but with experience it can be simplified.