Start with the existing lease

Read the assignment clause, not just the term and rent. It may require landlord consent, financial information about the incoming tenant, payment of costs, new guarantees or satisfaction of other conditions.

Retail lease disclosure requirements

For leases governed by the Retail Leases Act 1994 (NSW), additional statutory steps apply. The NSW Small Business Commissioner’s current guidance states that an assignor seeking protection from ongoing liability should provide the assignor’s disclosure statement to the landlord and proposed assignee at least seven clear days before assignment, together with the required information.

A deed of assignment may transfer the tenant’s interest without fully releasing the outgoing tenant or guarantors unless the lease, statute or deed produces that result. The seller should identify whether it remains exposed after completion.

Incoming tenant due diligence

The buyer should review the entire lease history: original lease, variations, disclosure statements, rent reviews, options, arrears, incentives, make-good and any side agreements. The lease being “assigned” is the whole legal bargain, not only the rent amount shown in the broker’s advertisement.

Coordinate the sale contract conditions

The sale agreement should state what happens if landlord consent is delayed or refused, who bears landlord legal costs, whether the buyer must accept reasonable amendments, and whether completion is conditional on the lease assignment completing simultaneously.

Guarantees and security

The landlord may require personal guarantees, a bank guarantee or increased security from the buyer. Those requirements should be known before the business contract becomes unconditional because they affect finance and personal risk.

Completion mechanics

At completion, the parties may need to exchange the deed of assignment, landlord consent, keys, security instruments and rent/outgoings adjustments at the same time as the business purchase price is released.

Seller checklist

  • Provide the lease and all variations early.
  • Ask the landlord/agent for their assignment requirements.
  • Identify disclosure deadlines if the Act applies.
  • Negotiate release of outgoing guarantees.
  • Coordinate consent with the business sale completion date.

Official resources

Important: This article is general information only and is not legal, tax, financial or accounting advice. The legal outcome can depend on the documents, dates and facts. Obtain advice about your circumstances before acting, particularly where a statutory deadline applies.