Business Name As A Lessee

We are often instructed to draft a lease in the name of the business. This is no surprise, as many owners of small businesses wish to use their business name wherever, and as much as, possible.

Unfortunately, we have to advise our clients that this is not so straight forward. The reasons for this are that a lease is a legally binding document that creates an interest in land. Land can be held by any legal entity: an individual, a corporate body (e.g. company) or in a trust. A mere business name is not recognised as a legal entity.

In such cases, we offer our clients the option to register a new company using the same business name. However, this means that the company has no accounts to show to the landlord that it is trading well and will be able to afford paying the rent. This usually means that the landlord requires extra security in the form of a rent deposit or personal guarantees given by the director(s) of the company for the obligations of the lessee. Some landlords require both.

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