You’ve sold your business and as part of the sale the lease has been assigned to the new buyer, what does this mean for you in the future?

Do you have a personal guarantee under the lease?

One of the biggest risks under the assignment is that your personal guarantee continues and you would be reasonable for any failings of the new (or even subsequent) tenants. This guarantee will generally extend for the life of the lease.

We recently assisted a previous business owner that sold their business in 2008 and we collected up by a tenant in default in 2017, this was the fourth owner of the business since they sold.shutterstock_663515332

In this situation there was a claim made, not only for the rent arrears but also damage to the property and a shortfall of the rent until the end of term, in their case this exceeded what they originally sold the business for.

A failure to get a release at the time of sale or even a time limit after the sale would have minimised this problem. If you have a historical exposure, it is worth making the exercise in protecting yourself against the actions of a future tenant. Give our team a call to explore your options on 1300 023 782 or email team@cdrta.com.au

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Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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Post Author: Craig Dangar

Craig is the principal consultant of C&D Restructure and Taxation Advisory and has been working in the industry since 1999. Having established C&D Commercial Partners in 2015 the precursor to the current business.

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