The premises lease
Many businesses lease their work premises. In some cases, the unexpired part of a business lease can be a valuable asset that can be realised if the client decides to cease trading or trade from other premises. Professional advice should always be sought on the valuation of such leases. If a lease is to be ‘assigned’ to another person, legal advice should be sought. The permission of the landlord is required. In certain circumstances, if the new tenant fails to pay their rent, the earlier tenant can still be held responsible. To protect against this future liability, it is sometimes better to agree to surrender a lease, even if it may be sellable for a premium.
A landlord may be prepared to accept the surrender of a lease (which ends the tenant’s contractual obligations, such as rent and therefore business rates) if it is clear that they are unlikely to get any more money from a particular tenant. If a client has ceased trading and is likely to remain unemployed for some time, and has responsibility for a lease, you could approach the landlord directly.
Explain that the client is unlikely to meet their contractual obligations and, in some cases, landlords agree to a surrender. You should ensure that you are not dealing with a lease that is of value (perhaps because it forms a small part of a redevelopment site or because the rent has been fixed at a low rate for many future years) before the client gives it away. Specialist advice should be obtained.