In Part 1 we left it at the point where we asked what steps a landlord could take in order to be able to walk away completely and not have any residual liability in relation to an existing Lease at the time of sale.
Well, here is the answer.
It’s called a Lessor’s Assignment Deed and as well as passing all the contractual benefits of the Lease to the new owner, it will ensure that the new owner promises to fulfill all the obligations of the landlord under the Lease. This means that if something happens and the tenant does sue, you can happily sit back and let the lawyers slug it out.
The problem that we often encounter is that as most landlords and Agents are not aware that this document needs to be done prior to settlement, they don’t include a special condition in the contract setting out that the parties agree to enter into the Deed and also setting out who pays the costs of approx. $660 and as a result no Deed is entered into which means that the old owner remains liable.
So, if in the future, you are about to enter into a contract for the sale of a commercial property that has a Lease in place, give us a quick call and we will email you or your Agent, the appropriate special condition to include in the contract so that you can walk away completely after settlement and not have to worry.
As always, if you have any questions, please give me a call.