There are a number of things to consider when selling a business, one being what happens with your lease. Depending on the details of the lease, a term of the contract may be that the Lease is assigned to the new Buyer or, that a new lease is entered into. Either option requires consent from your Landlord and if it’s a retail shop lease, there are further disclosure requirements.
If you are assigning the lease, it is important to review the assignment provisions first to determine if an assignment is permitted by the lease, and if so, what requirements need to be met for the Landlord to consent.
When a Tenant (seller) wants to assign a Lease that is in connection with a Retail Business, the Retail Shop Leases Act 1994 require both you as the Seller and the Landlord to provide a Disclosure Statement to the Buyer. There are strict timeframes that need to be met by both a Seller and the Landlord.
If a disclosing party fails to comply with the disclosure requirements, then a retail tenancy dispute will exist between the parties. Unlike a situation of failure to provide a disclosure statement upon the commencement of a new lease, here there is no automatic right to terminate the assignment.
The party who should have received the disclosure statement can apply to QCAT for an order that the document is provided at any time within two (2) months from the assignment date.
Where the contract provides that a new lease is to be entered into, this is something that should be discussed with your Landlord or Managing Agent prior to the Contract being entered into. There is no obligation for the Landlord to agree to a new lease with the Buyer and your contract cannot proceed without the new lease. If your Business is a Retail Business then the usual disclosure requirements for a new lease will apply.
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