ANU KANIYALI (ADVOCATE) 16 July 2011

Sale of Business and Rent Agreement

Dear Experts, My client wants to purchase a restaurant from a lessee / tenant. The lessee / tenant, by way of a Rent Agreement, set up the said restaurant business and is carrying on the restaurant business in some of the shop rooms belonging to the Owner of the building. The said Lessee / Tenant now wants to sell his business to my client, and now onwards my client will pay the monthly rent to the Owner of the aforesaid shop rooms after purchase of the said restaurant business. My client now wants to enter into an Agreement for Sale of the aforesaid business with the Seller of the said business as well as a Rent Agreement with the Owner. My client will make part payment now and will pay the balance amount later.

I would like to know whether it is right to make an Agreement for Sale in this matter. Kindly give some suggestions in this regard.

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4 Replies

KAMARAJ BHARATHY G (ADVOCATE- HIGH COURT) 17 July 2011

Your clients and the restaurant owner will be the parties of the sale of restuarant deed and the owner of the building will be confirming party to confirm the ailenation of lease hold right from the restuarant owner to your client. In these circumstances your client need not execute two deeds of purchase of restuarant and lease the rooms.

DEFENSE ADVOCATE.-firmaction@g (POWER OF DEFENSE IS IMMENSE ) 17 July 2011

In such cases the landlord will never agree and if you make direct agreement of sale it amounts to sub tenancy and a good case for eviction.

There are however other methods to come out of this problem which will deffer from case to case.

CS (cs) 18 July 2011

agreement of sale will be required absolutely, as the the purchser is making part payment and the seller of business would insist this to insure final payment

there would be one agreement consisting of three parties , purchaser and seller will agree on terms and conditions of sale of this business, and mode of payment

Shop owner and purchase would agree for tenency rights and obligations

Best

niranjan (civil practice) 18 July 2011

Only if your Tenancy agreement allows you for giving the premises on sub lease,you can do so.You can sell your business but you cannot sell your tenancy rights.