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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4414
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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My family has 2 companies x and y. x buys capital equipment

Customer Question

My family has 2 companies: x and y.
x buys capital equipment wholesale and then rents it to company y, over a 3/4 year term, after which the ownership of the goods is transferred to y.
The value of the goods exceeds £45,000. We need an enforceable agreement between the 2 companies, showing that the equipment belongs to x, until the end of the rental agreement.
Does x need to have a consumer credit licence or other? Does this agreement need to be drawn up by a solicitor or can we use a standard rental template?
Submitted: 5 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 5 years ago.

Dear Friend,

 

First of all, this does not require a consumer credit license. This is a simple agreement between to business entities. Also the company x is not in business of leasing / renting of equipment and thus it does not require such license.

 

If you closely hold these two companies and if it does not have chances of any disputes in future, you can use standard rent template. Or else, get it drafted by a solicitor.


I hope this helps...

Warm Regards,

Customer: replied 5 years ago.

the reason we are doing this is so that company x remains the owner of the equipment, so in the unfortunate event, where company y fails/becomes insolvent, company x can reclaim its property. The only creditors that company y has, is the Landlord.

Based on this a standard rent agreement is sufficient to protect company x and y in these circumstances?

Expert:  Rakhi Vasavada replied 5 years ago.

Dear Friend,

 

Yes, more or less the standard rent agreement would suffice. However, it would be better to add a specific Clauses enabling the Company X to reclaim its property in event of Company Y failing to pay or becomes insolvent. This would suffice to protect the interests.

 

I hope this helps...

Warm Regards,