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Thomas
Thomas, Lawyer
Category: UK Law
Satisfied Customers: 6450
Experience:  BA (Hons), PgDip, Practising Solicitor
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as a landlord of my pubrestaurant i have rented the restaurant,

Resolved Question:

as a landlord of my pubrestaurant i have rented the restaurant, kitchen and food out to a couple for the last three and a half years. they have made a great success of the business and appear to own the goodwill. i have no agreement with them. how do i stand
Submitted: 3 years ago.
Category: UK Law
Expert:  Thomas replied 3 years ago.
Hi
Thanks for your question.
To enable me to answer your question could you please respond to the following:-
1. Do you have any written agreement with them at all regarding their occupation of the property
Kind regards.
Tom
Customer: replied 3 years ago.
i have no written agreement only a verbal rental agreement to pay rent per month and to pay thier share of the expensces in relation to the business, utilities etc. they have invested a substancial sum in improving my property and i take the much increased drink revenue
Expert:  Thomas replied 3 years ago.
Ok.

So you run the bar, they run the restaurant. Correct?

Kind regards,

Tom
Customer: replied 3 years ago.
yes. also i live above, they have thier own house and they operate the food side and are present during restaurant hours
Expert:  Thomas replied 3 years ago.
Is the bar/pub that you run and the restaurant they run separate?

Do they have different names?

Tom
Customer: replied 3 years ago.
yes. also i live above, they have thier own house and they operate the food side and are present during restaurant hours and yes the restaurant is under there own chosen name for which they have banners and signs around my property
Expert:  Thomas replied 3 years ago.
Hi,

Thanks for your reply.

You both really need to sort this out. They are accuring goodwill on a business which they occupy under an informal licence from you only. This means that you could effectively obtain possession of their part of the property by only serving “reasonable” written notice upon them. This puts them at a severe disadvantage.

You should both see a commercial property solicitor about arranging for them to take a lease of that area of the property which they occupy so that you have a guarantee of a rental income (because they could simply vacate at present and leave you up the creek) and they have security of tenure. You can negotiate the terms if you like (eg. Term, rent, break clauses, rent review).

I should think they would be keen on this given the lack of security of tenure they have at present.

The alternative is that you grant them a management agreement to manage the food side of your business, but I doubt they would be interested in that if they have built up goodwill in their own enterprise, which is a separate business entity.

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
Customer: replied 3 years ago.
what would i have to pay them if i give them notice
Expert:  Thomas replied 3 years ago.
Why do you think you would have pay them?

Tom
Customer: replied 3 years ago.
because thet own the goodwill and have invested some £50,000 in making the place servicable for public use
Expert:  Thomas replied 3 years ago.
You would only have to buy the goodwill if you were buying the business from them (ie. if you wished to run it under the same name after you served them with notice). If you wished to do this then you would have to negotiate a price for the goodwill. If you did not wish to do this then you could serve notice and they would have to vacate and take their fixtures and fittings with them.

It was their choice to invest money without any security of tenure. Not yours.

The point is that I presume the situation is desirable for both parties. If so, you need to formalise it in a collaborative way by seeing a solicitor and sorting out a lease.

Trust this clarifies, if so please click accept.

Kind regards,

Tom
Customer: replied 3 years ago.
what about the improvementshave made to yhr building they to the building
Expert:  Thomas replied 3 years ago.
Hi,

Well, they could attempt to claim an interest in the property as a result of the value of the property having been materially improved by those works if you consented to them, but they would have to issue a claim in respect of these.

This would involved litigation, which can be very stressful and expensive for both parties.

I would focus less on "what if's" and instead focus on how you can formalise the arrangement to your mutual satisfaction because this is better than the alternative of litgation.

Please click accept. I will continue to answer any follow up questions you have.

Kind regards,

Tom
Thomas, Lawyer
Category: UK Law
Satisfied Customers: 6450
Experience: BA (Hons), PgDip, Practising Solicitor
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