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Im think about investing in a high street cafe. The present

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I'm think about investing in a high street cafe. The present tenant has a 12 year FRI lease. I do not want to take the lease on myself but want to be an investor. We are thinking about a partnership arrangement. The present tenant is a self employed sole trader. Could we enter into a partnership agreement without affecting the present tenant's lease? And would I be able to secure my investment through the partnership agreement with a percentage share in the business without having any interest in the building?
Submitted: 3 years ago.
Category: UK Law
Expert:  Thomas replied 3 years ago.
Hi

Is the tenant amenable to this?

Has he disclosed to the landlord?

Tom
Customer: replied 3 years ago.
Yes the tenant is amenable to this & he has not disclosed this to the landlord yet as we are only in preliminary discussions.
Expert:  Thomas replied 3 years ago.

Hi,

 

Would this merely be an investment? You would not be taking possession of any separate part of the cafe or carrying out any other kind of business from there?

 

What would you be seeking in return for your investment? A percentage share of the profits?

 

Tom

Customer: replied 3 years ago.

Hi, I would not be taking any possession of the cafe or any other kind of business from there. Yes I would only be taking a share of profits through perhaps partnership agreement.

 

Tony

Expert:  Thomas replied 3 years ago.

Hi Tony,

 

Thanks for your question. Sorry for the slight delay in responding.


There will be a provision in the Lease that prohibits share possession of the premises with others, so provided you do not breach this then there will be no breach of the lease which the landlord could enforce in this regard. You will have to have the lease checked for any other terms specific to that lease and that tenant to ensure that there are no other prohibitions but, generally, I would not expect any.

 

On that basis you could draw up a partnership agreement confirming what your proposals are but it is important to note that you will not acquire nor shall be able to acquire any interest in the lease in the future. It will remain separate to your agreement and if he defaults on the partnership agreement then although you would be able to sue for the contractual breach you would not be able to compel him to assign (ie. sell) the unexpired residue of the lease to a new tenant - you will simply be able to sue for damages.

 

Similaly if he tries to assign the lease then you would not be able to restrict the landlord from agreeing to give his consent to this, though again if you have a term in the partnership agreement stating that the tenant should not sell unless you are in agreement then you would be able to sue for contractual breach.

 

If this has been useful please kindly click accept so that I may be rewarded for my time. If you do not click accept your money stays with the site and I do not receive any credit for the time I have taken to answer your question.

 

I will answer your follow up questions you may have.


Kind regards,


Tom

Thomas, Lawyer
Category: UK Law
Satisfied Customers: 6396
Experience: BA (Hons), PgDip, Practising Solicitor
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