23 Dec 2013
Words Tim Admin

Terms of the Contract - Landlords Consent

Like many businesses, the sale of a motel lease is not simply a transaction between a vendor and a purchaser. In any business where the premises are leased, a landlord must give permission before the lease can be transferred. The contract of sale will be conditional upon the landlord's consent (and the landlord's bank's consent) to the transfer of the lease. Any costs associated with obtaining the consent of the landlord and the landlord's bank are the vendor's is responsibility. If the consents are not obtained by the date of settlement then the purchaser will be able to terminate the contract. There are no set rules for obtaining the consent of the landlord. In some cases the landlord will wish to meet with the proposed purchaser, in others the landlord will simply want to see the references and resumes of the proposed purchaser. The sale contract should require both parties to do all things necessary to obtain the consent. In particular the purchaser will be required to supply all references and information requested by the landlord or the landlord's bank. The vendor generally will not take any action before the purchaser's finance is approved to ensure that the purchaser is not introduced to a landlord only to pull out of the contract at a later point. However any person looking at purchasing a motel leasehold business should ensure that they have their references and resumes ready to go. This will avoid any possible time delays during the transaction. Generally the landlord will ask the proposed purchaser to provide the following documents: • a resume from the purchaser (or if the purchaser is a company the directors of the purchaser) (the resume should highlight the previous business experience of the purchaser and in particular any experience that will prove that the purchaser has the qualities necessary to operate a motel) • two personal references (i.e. someone who knows the purchaser on a social basis should provide a short written letter saying what a fine, outstanding member of the community the purchaser is) • two business references (from two people who have known the purchaser on a business basis. These references should confirm in writing that the purchaser's dealings with them have been professional and that the purchaser has the qualities necessary to operate a motel) • a statement of assets and liabilities (the landlord will want to be able to determine that the purchaser has some financial stability and will be able to continue to pay the rent) • details of any borrowings by the purchaser (again the landlord will want to be able to determine that the purchaser will be able to continue to pay the rent. The landlord will also want to understand if there is anyone else (ie. a bank) with an interest in the lease) Generally a landlord will want to satisfy themselves that you do not have any criminal convictions, you have a good character, your financial standing is sound and you will be competent at your job. A landlord is not able to unreasonably withhold their consent to the transfer of the lease. We will discuss this in more detail in our next article.