When you’re entering or leaving a business premise as a tenant, it’s always good to check if you need to transfer a lease. In other words, if the owner is changing, you need to make this official with your tenant.
This is known as ‘assigning a lease’ or ‘transferring a lease’. It occurs when you’re selling your business and the buyer agrees to be bound by the existing lease, or you’ve simply decided to move premises and have found another business willing to be bound by your current lease.
Essentially, when you assign your lease, you’ll be handing over the rights and obligations of that lease to another party. The last thing you want is to be liable for an old lease!
This is also known as a Deed Of Assignment, which we’ve written about in more detail here.
The Process Of Transferring A Lease
Transferring a lease doesn’t have to be a complicated process, so let’s break it down.
1. Review The Existing Lease
First thing’s first – you’ll need to ensure that there aren’t any conditions on the lease that would stop it from being transferred. To do this, you might want to look at the terms of your lease, and even have a lawyer help you out with this step!
2. Landlord’s Consent
Once you’ve determined that the lease is assignable, you’ll need the consent of the landlord in writing and identify what requirements you’ll need to fulfil.This can be different for each landlord, so make sure you and your landlord are both clear on what needs to be done.
3. Discuss The Assignee
Now, you need to chat with your landlord about who will be taking over your premises, otherwise known as the incoming tenant. For example, you need to collect their name, contact details and relevant documents for the transfer. This might include documents to show their financial status, or their business experience.
Once this is all taken care of, the landlord basically confirms their consent to the transfer, and the tenant also lets them know that they agree to it. This should be covered in what we call a Deed of Consent to Assignment.
The assignee will also agree to inherit the rights under the existing lease from a certain date until the lease term ends.
At this stage, it’s important for all parties to review the terms of the Agreement to ensure they are happy with what they need to do and for how long they will enjoy certain rights or interests in the lease.
I’m The Outgoing Tenant – What Else Should I Do?
Once the landlord’s consent has been received, we can start putting together a Deed of Transfer of Lease!
This will officially release the tenant from any responsibilities or liabilities under the lease, but until this is official, you want to make sure you uphold your obligations.
If you’re transferring a retail lease, the steps you need to take might look a little different. You may want to take a close look at the Retail Leases Act 1994, as this covers retail leases.
For example, the following things might be worth considering:
- Under a retail lease, as long as you have provided proof that the incoming tenant has good financial standing, you can force the landlord to provide consent
- However, if the incoming tenant is not financially reliable, the landlord is under no obligation to provide consent
It’s important to understand what you can and can’t do depending on the type of lease you’re under. You can read more about transferring leases here.
Whether you need one drafted or looked at, we’d love to help! You can reach out to our friendly team on 1800 730 617 or firstname.lastname@example.org for a free, no-obligations consultation about your specific situation and the legal documents that are right for you.
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