Buying a business with leased premises

A business purchase needs a clear answer to what premises rights the buyer will receive. Buying equipment, stock and goodwill does not itself guarantee a right to occupy the seller's shop, office or workshop. ^[1]

Identify the transaction structure

Establish whether the buyer acquires company shares, business assets, an assigned lease or a new lease. Check the current tenant's identity and whether the lease contains relevant assignment or change-of-control provisions. Explain any proposed early access for training or refurbishment.

Coordinate the business and property documents. Conditions, completion dates and remedies should address what happens if the required consent or new lease is unavailable.

Investigate inherited premises problems

Request arrears information, service charge accounts, repair records, alteration consents and any notices. Identify equipment owned by third parties and contracts that will not transfer automatically. A successful trading history does not prove compliance with the lease or planning conditions.

Lease assignment and Permitted use are separate due-diligence strands. Before completing, confirm who receives the keys, who becomes liable for ongoing charges and what security the landlord requires. Record unresolved liabilities in the transaction terms rather than leaving buyer and seller to settle them informally afterwards.

Identify what the buyer is acquiring at the location Set out whether the proposed deal transfers company shares, selected business assets or a combination of interests. Identify the entity named as tenant and compare it with the seller of the business. A founder may own the trading company while a different company or individual holds the lease. The buyer needs a clear legal route to the premises that support the acquired trade. Do not assume that purchasing the familiar brand or all visible equipment also transfers the right to remain in the location where customers expect to find it.

Ask the property adviser to examine the lease consequences of the actual structure. An asset purchase may require an assignment or new lease, while a share transaction can raise different contractual questions, including any relevant control provisions. Explain whether the business will continue the same activity and whether the buyer intends immediate changes. The RICS leasing code identifies use, transfer rights and security as important lease matters. ^[1] Apply those questions to the proposed acquisition rather than treat the seller's existing occupation as proof that the buyer can operate on identical terms. ## Test the premises against the value attributed to the business Identify which aspects of the location support the purchase price. A particular shopfront, parking arrangement, workshop installation or customer access may be central to the business's value. Ask whether the lease actually secures those features for the period assumed in the acquisition plan. If a break, expiry or redevelopment issue is approaching, disclose it to the advisers assessing the business. A strong trading history describes past performance; it does not establish the duration or flexibility of the premises rights that the buyer will receive after completion.

Investigate facilities and permissions that may belong to another party. Equipment can be leased, subject to finance or installed under a personal consent that needs review on transfer. Service contracts, telecoms connections and permits may require their own arrangements. Prepare an asset-and-facility list showing ownership and the evidence available. The buyer should know which items transfer with the deal, which need a separate agreement and which cannot be assumed to remain merely because they were working during the inspection or demonstration of the business. ## Allocate identified property liabilities in the sale terms Obtain the lease account, service charge information, repair records and notices concerning the premises. Identify alterations and compare the installed layout with the consents supplied. If a landlord has raised a breach, provide the correspondence and any proposed remedy. The acquisition documents should address the significance of those matters with appropriate advice. A broad statement that the business is sold as seen does not explain the external obligations the buyer may accept or the protection needed for an identified pre-completion property problem.

Discuss arrears, later accounting adjustments, deposits and guarantees with both the business and property advisers. Agree the treatment in the completion statement and supporting documents, distinguishing payments between buyer and seller from releases that require the landlord's participation. If a liability remains uncertain, decide whether further evidence, a contractual allocation or another arrangement is needed. Do not leave a substantial unresolved charge to a future friendly discussion after the sale, when the parties' incentives and access to the records may be quite different from those during negotiations. ## Coordinate consent and the first day of trading Build the transaction timetable around the documents needed to secure occupation. If landlord consent or a new lease is a condition, ask what happens if it is delayed, refused or offered on materially different terms. Avoid completing the business purchase on an assumption that the property paperwork will inevitably follow. Any early access for training, refurbishment or stock transfer needs its own assessment. The buyer's presence before completion can create practical and legal issues that should be addressed expressly rather than hidden inside an informal handover arrangement.

Prepare a premises handover record covering keys, security codes, meter readings, maintenance contacts and essential compliance documents. Confirm when the buyer becomes responsible for each ongoing charge and how payments spanning completion are allocated. Retain the completed lease or assignment documents with the acquisition file and give operational staff the information needed to run the site. The final check is whether the buyer can lawfully and practically operate the acquired business from the agreed date, using the rights, facilities and documents actually secured by the completed transaction.