Business and premises transfer
The transfer of business means giving it to another person in exchange for a fee. It is essential to be well advised to avoid future unnecessary expenses. Here we present the different characteristics of this kind of contract. Consult our experts for any questions about the business you are interested in.
How does the business and premises transfer work?
The contract of business or premises transfer transforms the purchaser into the tenant, replacing him in the rights and obligations of the contract of original rent.
This contract has many benefits for SMEs. For example, the new entrepreneur saves the costs and problems of introducing his business in an area. In addition, it allows you to access to a consolidated business providing important values for a company such as: a brand or known trade name, customer portfolio, network of suppliers in the area, workers with experience in the business…
In addition to doing a market study, keep in mind…
Before signing the contract of assignment, we recommend you investigate the business to know how to manage it and its product. It is important to know the characteristics of the local and possible reforms, sector of the market, potential clients, suppliers, outstanding debts, rental price of rent, price for the transfer, etc.
Save on complications by improving your future business!
- Consequences of the debts of the former lessor: creditors may require the payment of debts as you will be the current owner of the business. Creditors can be both individuals (suppliers, workers, etc.) and public institutions (treasury and Social security for unpaid taxes).
- Fixing the price: Traditionally, this form of cession was known as transfer of business premises and the assignor could set a price. However, after the LAU reform of 1994, there is no obligation to give the lessor any amount, unless the lease was signed before 1994. It is interesting to know if the principal rent is prior to the law reform or not, and thus to improve the agreement.
- Rent increases: According to the LAU, the lessor will only be entitled to an increase of the rent. You should agree with the assignor or the owner about what amount you are going to pay to avoid unpleasant surprises.
See also our guide about “Subleasing“
What should this contract contain to make it legal?
- Obligations of the parties: prior to transfer, the landlord must be informed that the premises will be assigned.Unlike subleasing, where a rental is made within another, this contract implies a new contractual relationship in which the same conditions of the previous rental are transmitted, ending the rental. Therefore, it is very important to communicate the change of tenant to the owner of the premises (via Burofax, notarial letter, etc.) with a time limit of at least one month. If the latter does not give his consent he can cancel it.
- Business transfer contract: Normally, the transfer of business will include the same pacts as agreed in the original rental. These clauses include the permitted use of the premises, price of the rent, bail and way of managing the business.
- Duration: The law requires the purchaser to operate the business for at least one year.
Additional requirements:
- Price per transfer: As noted above, the transfer may lead to payment of the price for the transfer.
- Rent increases: The lessor can raise the rent up to 20% (up to 10% in partial assignments).
- Elevation to public deed: it is necessary for the transfer to be elevated to public deed before a notary. It must comply with the requirement of reliable notification and the price offered for the transfer.
- Debts of the former lessor: we recommend to verify in advance which debts are pending.
In addition, you must attach to the transfer contract…
- Copy of the identity documents of the parties
- Copy of the main or original rental contract.
- Inventory of furniture and appliances, if any.
- Transfer of the opening license.
If you need tax advice or with the transfer of a local business, write a message to our experts. They’ll be happy to help you.
