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lease or licence

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  • 06-05-2017 4:15pm
    #1
    Miamiheat
    Registered Users Posts: 291 ✭✭


    Hello,

    Seeking a little advice and wisdom

    I just made an offer to the owner of a massage shop to buy her business for my GF (she's a therapist). This has been a negotiation that took some time and a "lease" takeover or re-signing was always mentioned. In essence we buy the contents of the shop, the website and we sign a new agreement for the place with owner of the property.

    Part of my conditions set with my offer was to get a copy of the lease in advance in order to study it and make sure everything made sense. And today i get a 2 year licence agreement that allows the licensor to increase rent after 1 year...

    Not wanting to kill the deal systematically and perhaps unnecessarily as I am no expert I am here to seek opinions: I would dispute the 1 year licence raise clause, and think that a 2 months deposit is too much for a licence (given the advantages the licensor already has). I understand the procedure by the property owner because it seems to be common to rent offices in such buildings like that for small businesses or startups but since I am also paying for rights to existing customers and the the location of the previous business I have no interest in moving or this shop being easily evicted by the property owner. Should i ask for a lease?


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    #2
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    Miamiheat wrote: »
    I am also paying for rights to existing customers and the the location of the previous business I have no interest in moving or this shop being easily evicted by the property owner. Should i ask for a lease?

    Without a lease it is likely you could lose the location should the licensor decide he wants/needs it back. It sounds like you already knew that.

    A lease should give you more security but that works both ways. You could end up tied to a property you no longer want/need. That's assuming the existing property owner is even interested in offering a lease.

    He/she may have reasons for only offering a license, e.g. planning a redevelopment/sale etc.

    You need professional legal advice.


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    #3
    neris
    Registered Users Posts: 20,054 ✭✭✭✭neris


    lease. its more secure and more valuable to you should you sell on the business. make sure though if you get a lease theres a break clause in your favour and no upwards rent review bullcrap.


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    #4
    mrawkward
    Registered Users Posts: 498 ✭✭mrawkward


    The business vendor is operating on a licence agreement currently, I assume. The new licence to you has been offered by the landlord not the vendor? If this is the case you have little security of tenure and unlikely to have any right to renewal. Such a renunciation clause is also the norm in leases of less than 5 years duration. The current agreement is unlikely to permit any transfer to a third party.

    The landlord can set the terms and conditions as they wish and the goodwill etc of the business is of no concern to them.

    Location centric retail outlets really need a lease of more than 5 years which thus entitles the tenant to a legal ongoing right to renewal at market terms.

    The legal position is quite simple, the big decision is a business one, if you were terminated after 2 years, would you have recovered the initial investment and made a return?


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