If you lease your business premises, you may want to sell the lease when selling your business. Leases can be the most valuable asset you have in your business depending on its terms and the location of the property.
For example, leases which give the right to a tenant to request a new lease from the landlord at the end of the term are more valuable than those which don't. This right can be called lots of different things - Landlord and Tenant rights, 1954 Act rights and security of tenure. This is because someone will pay more for the lease if they have the opportunity to stay in the same location for longer.
The first place to begin when considering a sale is to check that you have the right to sell (also known as 'to assign') your lease. You will be looking for the 'assignment' clause in the lease.
This clause will give you a lot of information about your obligations when you sell. It is likely that the landlord's consent will be required and there may be specific criteria that the incoming tenant (assignee) must meet to be accepted.
You should seek the landlord's consent at the very early stages of a transaction to avoid unnecessary delay and will need to pay any fees they incur in dealing with the assignment.
Their solicitor will prepare a Licence to Assign between the landlord, you and the assignee. This is the document which gives you the permission to sell the lease.
This document may have further obligations for you and the assignee to comply with either before the assignment completes or afterwards.
You will then need to agree a Deed of Assignment between you and the assignee. This formal document will confirm that the assignee takes over your lease responsibilities. It cannot be completed before the Licence to Assign.
Following completion, if the lease is registered, ensure that the assignee provides you with proof that they have updated the Land Registry records. You should also contact any service providers and the Council if you have not sold the business name or the records are in your name.
If you need any assistance when selling or buying a commercial lease, please contact Bury and Walkers.