There are a number of situations where it is desirable to transfer a commercial Lease from one party to another- this is known as an Assignment.
If a business wishes to vacate their premises before the Term of a Lease has elapsed, they can transfer the Lease to another party in order for them to complete the term — this could, for example, be for reasons of financial difficulty or due to the need for larger premises.
Whatever the exact circumstances may be, there are a number of legal issues that need to be taken into consideration.
Does the Lease allow for Assignment?
Not all Leases permit Assignments, in the same way that not all Leases have Break Clauses. The Lease should be checked for clauses relating to Assignments, ideally by a Solicitor.
If the Lease does permit Assignments, the current Landlord must then be contacted in order to ascertain whether they would be amenable to an Assignment of the Lease taking place.
Potential objections from the current Landlord
If the nature of the business be carried out at the property is to change, the Landlord may be within their rights to raise an objection. However, they may also wish to ensure that there will be a long-term Tenant at the property and that their rental income will not be affected.
It is advised to keep the Landlord informed in advance of any potential Assignment — this should leave them more inclined to agree to an Assignment and after all, it must be remembered that they are entitled to simply enforce the existing Lease through the appropriate legal channels.
Other possible options
The Landlord may instead suggest that the Lease is rescinded and a new Lease granted to the incoming Tenant. The Landlord may suggest that the new Lease be granted on the same terms as the one being rescinded, however amendments to the terms of the Lease, such as a longer Term, are not uncommon.
Appointing an experienced Solicitor to oversee the entire process can ensure that all of the necessary information is in hand before signing on the dotted line.
‘Sweetening the deal’ for the new Tenant
If the incoming Tenant is taking a risk in assuming responsibility for the assigned Lease, it is likely that they will want the best possible deal that mitigates the expense and general hassle of having to move premises.
It is therefore prudent to consider to what lengths you wish to be removed from the obligations of your Lease.
Once again, an experience Solicitor can ensure that all of the necessary legal documentation is drafted to create a legally-binding record of the value of the Lease Assignment (fixtures, fittings, stock, goodwill and so on).