The Dangers of a New Tenant
The transfer of a lease can have a significant impact on a landlord and the value of their asset. Often the tenant has sold their business and the last link in the chain is obtaining the landlord's consent to the transfer. The sitting tenant will want this processed quickly and will put pressure on the landlord so that they can get their money quickly and move on.
From a landlord’s perspective, it is important that a proper due diligence is carried out on the new tenant. The landlord needs to ensure that the proposed tenant has a positive trading history, appropriate experience, adequate assets (which are in the tenant’s name) and that they are genuine and reputable.
If it is a retail lease and there is compliance with the Retail Leases Act, the assigning tenant will no longer be responsible for the payment of rent and outgoings even if the new tenant defaults. This further emphasises the importance of a careful due diligence.
As a landlord, you need to ensure that you respond within the time period set out in the Retail Leases Act (if such Act applies), or you will be deemed to have consented. However, always ensure that you ask for what you need and satisfy yourself that the new tenant has the resources to comply with your requirements.
Do not be pressured into making a decision, and if you need additional security or personal guarantees, ask for it. The type of tenant that you attract can ultimately impact on the value of the property, and so it is not a matter that should be taken lightly.
For more information or advice surrounding the Retail Lease Act, please contact Jonathan Tisher in our Property Law department.
