Transfer trading lease: landlord can throw a spanner in the works

Suppose the trade tenant wants to quit and instead of quitting the business altogether, he wants to hand it over to a new enthusiastic operator. It's becoming more and more common.

Mind you, that can't happen overnight.

Indeed, the possibility of assignment is often restricted in the lease. Many standard contracts stipulate that the transfer of the lease is basically prohibited unless the landlord gives his consent.

"What does your agreement say?"

In addition, the Commercial Lease Law provides that if there is a prohibition in principle against transfer in the Commercial Lease Law that a specific procedure must be followed. The tenant must notify the intention to transfer by registered letter to the landlord, who then has 30 days to respond. If the landlord does not respond within that 30-day period then he is deemed to have agreed to the transfer request. If the landlord does not agree to the proposed transfer then he must refuse within those 30 days, giving reasons. This also by registered letter. If the tenant cannot accept this refusal, he must take the matter to the Justice of the Peace within 15 days of receiving the landlord's objection. This under penalty of forfeiture.

"Has that procedure been followed? If not, the transfer application may be invalid."

This with all its consequences. After all, the transferee had already prepared for this and may have already incurred costs... . The tenant may have to pay them back.

Then again, for the landlord, the following is important: not every reason makes a valid ground for refusal. For example, the landlord can validly oppose if the new tenant is known to be a defaulter, is financially a lot less strong than the first tenant, and/or if the first tenant has operated the business for less than two years. The landlord must also always respond by registered letter. If not, his opposition will not be accepted.

Bannister is more than happy to help you (tenant or landlord)!