Reading time: 3 minutes

For anyone who has operated and sold a business, they would know that it is a two-step process: selling the business assets and assigning the lease for the premises. The procedure for assigning the lease involves seeking the lessor’s consent. It’s important to understand the process and your rights whether you are the party assigning the lease (assignor) or buying the business and taking over the lease.

Assigning the Lease: What You Should Know

Before entering into the Sale of Business Contract, you should inform the lessor in writing of the proposed sale and provide the lessor with the information required as stated in your lease under the assignment provision. State-based retail legislation governs a retail lease and the lessor cannot unreasonably withhold consent if you provide the requisite paperwork concerning the new tenant’s financial standing and business experience. The landlord must also give the incoming tenant a copy of the disclosure statement that they received at the time of entering into the lease or request an updated disclosure statement from the lessor to provide the assignee/incoming tenant.

Taking Over the Lease: What You Should Know

If you are purchasing a business, you must ensure that the term of the lease for the premises is long enough for you to carry on the business. It may be worth requesting to extend the term of the lease when you are seeking the lessor’s consent to the assignment of lease. The lessor, however, is not obliged to change the lease condition or duration (but it is worth a try). With an assignment of lease, you are taking on the lease agreement on an “as is” basis with little or no scope for any changes to the documents. Consequently, you would hope that the current tenant/business owner has already done all the hard work of negotiation for you!

The Lessor’s Obligations in an Assignment of Lease Process

In Victoria and New South Wales, the Lessor must deal expeditiously with a request for an assignment. This means that the lessor is deemed to have consented if the lessor has not given written consent or withholds consent within 28 days of being requested to do so. In QLD, there is no timeframe for the lessor’s consent. A lessor may withhold consent to an assignment if the assignee proposes to change the shop’s use or if the new tenant’s financial resources or retailing skills are inferior to that of the assignor/existing tenant.

Key Takeaways

Assigning a lease is a formal process that goes hand in hand with selling or purchasing a business and often both transactions are done simultaneously to ensure a seamless changeover for both parties. If you would like assistance with an assignment of lease or have any questions about your sale or purchase transaction, get in touch with our experienced commercial leasing lawyers on 1300 544 755.

Webinars

Trade Marks 101

Thursday 17 June | 11:00 - 11:45am

Online
Your trade mark is one of the most valuable assets of your business. It is therefore crucial to understand how to protect your trade mark, avoid disputes, and prevent competitors from infringing on your rights.
Register Now

Expanding Your Australian Business into New Zealand

Thursday 24 June | 11:00am - 12:00pm

Online
Looking to expand your business into New Zealand? Don’t get tripped up on common mistakes.
Register Now

Preventing Wage Underpayment in Your Business

Thursday 8 July | 11:00 - 11:45am

Online
Learn how to identify and prevent wage underpayment in your business.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer