... What it Means for a Landlord
If you are a commercial building owner, you will at some point come across a situation where your current tenant wants to sell their business. Tenants often forget to talk to their landlord about them consenting to the new business owner.
When a business is sold, the current tenant is obliged to seek the landlord's consent to assign the lease to the incoming business owner. The landlord usually has 10 days to approve the new tenant.
As a landlord, do you know what to look for? How can you be sure that the new tenant will pay their rent on time, and will look after and care for your asset as well as the previous tenant has done? The short answer is – you can't really. However, there are some steps you can take to gather as much information as you can on the new tenant.
• Obtain a credit check on the incoming tenant and any guarantors
• Ask to see copies of their business plan and financial statements (if available), and
• Check to see if they own any other property.
You can refuse consent to the assignment on reasonable grounds. However, landlords often feel they have no choice but to agree; you have every right to take time to do some due diligence on a new tenant. If you're unsure what you can ask a possible incoming tenant, do talk with us.