We currently lease a motel premises and run the business. The owners of the building are wanting to sell and are asking

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Customer: We currently lease a motel premises and run the business. The owners of the building are wanting to sell and are asking if we would be interested. They want us to give them a figure that we think is fair for the land and building plus the business. My issue is, doesn't the business already belong to me?
JA: What state are you in? It matters because laws vary by location.
Customer: New Zealand
JA: What steps have you taken so far?
Customer: We have only had phone conversations
JA: Anything else you want the Lawyer to know before I connect you?
Customer: She believes she owns the business and wants me to buy it from her. I have built the business though and believe I shouldn't have to pay her for my hard work.
Answered by Chris The Lawyer in 2 hours 1 year ago
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Chris The Lawyer
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Chris The Lawyer, Expert

Hi
I am a New Zealand lawyer based in Wellington and will help you with your question today. Please give me a minute to read your question
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Chris The Lawyer, Expert

There is a difference between running the motel business which is a lease from the owners, and owning the freehold land and buildings. I assume that is what they are trying to offer. Once your lease comes to an end, then you have to vacate but if you own the freehold you can run this as long as you want. But it would cost a reasonable amount and you should get a valuer to help set the price
Customer
they are offering the freehold but they are also trying to say that we need to pay them for the business. But as the Lessee do I not own the business?
Customer
Would you like to see a copy of the contract?
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Chris The Lawyer, Expert

That is correct. You own the lease and business so you don’t need to buy it
Customer

If they breach the contract by not offering the purchase etc us in writing before offering to sell to anyone else. What recourse do we have?

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Chris The Lawyer, Expert

Do you have an option to purchase in your lease or in any other document?
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Chris The Lawyer, Expert

If you don’t have an option then she can sell to anyone although any sale must recognise your lease, which continues regardless of the sale
Customer

Clause 12 states that we must be offered the first opportunity to buy in writing and that we have 15 days to respond. I know through phone conversations with the owner that they are also in discussions with other parties and are putting the pressure on us to make a decision.

If our 1st 2 years lease expires in March but we have the option of an additional 5 years does the new owner have to honor the option?

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Chris The Lawyer, Expert

she must comply with the option. If she doesn’t you can sue for a type of action called specific performance. If the new owner buys then that term in the lease still applies as does your option to renew the lease
Customer

So what would be grounds to not exercise the option?

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Chris The Lawyer, Expert

It is up to you to exercise the option-they must ask you, and you either make an offer to purcahse or decline the option

Customer
What about the option to extend the term of the lease? For the additional 5 years. Can the new purchaser chose not to exercise that option?
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Chris The Lawyer, Expert

That is a term of the lease which any purchaser would normally be bound by
Customer
If they decide to go with the 5 year lease extention option is there a limit to how much they can increase the lease payments? And how would this usually be calculated? They are requesting our financial statements to use our profits in the calculation. Isn't it based on Market value though?
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Chris The Lawyer, Expert

The lease can be adjusted in terms of the lease, on proper notice pursuant to the lease. The notice of any increase should be given, and you can then challenge this under the dispute resolution clause in the lease. It is based on market value usually

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