Anyone here familiar with commercial contracts/law?

[Ⓩ-Ⓐ-Ⓜ-Ⓞ-Ⓡ-Ⓐ]

Bit of a long shot but here we go...

Me and the wife are thinking of buying a lease on a restaurant space. Right now there are 3 years remaining on the lease, after which the existing building is due to be knocked down and rebuilt as a larger one.

The seller says that the landlord has an agreement with him for a lease in the new building (we will have to vacate for a year (that's not a problem for us) during construction). What we want to do is sign a "pre" contract agreement for that 10 year lease right now but starting in 2020.

My question is what would be the name of this type of contract? I'd like to do some online research but unsure what to look up....


Thanks...

 

[LowKarate]

I don't think there is any more special terminology than a 'pre-dated contract' or a contract with an 'effective date' which is in the future.

As long as both parties have every right to enter into a binding contract which is unfettered by any other party having a right that would interfere with your agreement (for example if the owner granted 'first right of refusal' to someone else which is not discharged) then you should be able to shape a contract with a binding future effective date.

 

[Ⓩ-Ⓐ-Ⓜ-Ⓞ-Ⓡ-Ⓐ]

Thanks for the advice!

 

[BhafcBlues]

If you're having no luck under 'pre dated contract' try looking under a lock out agreement, normally used for buying/selling houses but bacially both parties before concluding a contract agree not to deal with another third party (for a certain fixed period).
However as I said this is prior to concluding contract in the housing market I'm not 100% sure on whether it will be a binding contract for three years but would be worth a look at!

 

[desprateseagull]

letter of intent? Might need a holding deposit of some sort, on the new place..

 

[SUA Seagull]

Bit of a long shot but here we go...

Me and the wife are thinking of buying a lease on a restaurant space. Right now there are 3 years remaining on the lease, after which the existing building is due to be knocked down and rebuilt as a larger one. The seller says that the landlord has an agreement with him for a lease in the new building (we will have to vacate for a year (that's not a problem for us) during construction). What we want to do is sign a "pre" contract agreement for that 10 year lease right now but starting in 2020. My question is what would be the name of this type of contract? I'd like to do some online research but unsure what to look up....

Thanks...

What you're referring to sounds quite specific to what are your business intentions.

If, for example, you're only willing to consider buying out the current lessee's remaining 3 year lease on the condition that you know for sure that a subsequent 10 year new lease will be available then only the landlord can provide that confirmation, so he'll need to be involved in any dialogue with you now (and in relation to any future contract).

Ideally, as a minimum you would want to:

(i) study the current lessee's lease agreement with the landlord to determine what are the current lessee's rights to assign the current lease to a new lessee such as yourself,

(ii) study the landlord's draft lease for the new property (assuming if that even exists - which seems a long shot at this stage),

(iii) obtain the landlord's agreement for a future lease on the newbuild (which I am assuming you'd require as a pre-condition to you taking over the current 3 year lease).

(iv) obtain landlord's agreement to exclusivity or a right of first refusal on the newbuild lease.

You also want to know what exactly are the terms and conditions of the current lease and the new lease (rent, maintenance obligations, security deposits etc).

You also need to know exactly what are the terms/timing of construction of the newbuild space, e.g. what if it isn't built for 1-2 years, or not at all? What are you rights then? Has planning permission been obtained for the newbuild/is it definitely going ahead? If you pay any deposits, you should have the right for those to be fully and promptly refunded if certain of your preconditions aren't met.

If your restaurant business decision is to be predicated on more than a 3 year time horizon then you will need to know a lot more about the planned newbuild and your rights to lease space in it.

In a nutshell, and based on your brief summary above, it sounds like you need (I) a legal assignment of the current lease, and (II) a forward lease based on a future, agreed effective date, subject to preconditions to be agreed between you and the landlord.

You will need to take local legal advice by the sound of it, to ensure that any statements made by the current lessee can be backed up legally.

Hope this helps!

 

[Ⓩ-Ⓐ-Ⓜ-Ⓞ-Ⓡ-Ⓐ]

Thanks again everyone for their help! I will keep you posted on the outcome.

 

[Albion my Albion]

Thanks again everyone for their help! I will keep you posted on the outcome.

It was the lease they could do.