Disposal – What does a disposal mean?

What does a disposal mean

With a disposal, you get the opportunity to get out of a lease or a lease agreement by reselling this contract to another trader, who takes over the lease on the same terms that has already been determined. Setting the price on a disposal is done by looking at the yearly rent, the location and other relevant factors in the applicable lease.

Disposal can be used when selling shops, cafes and restaurants. A disposal is often used among restaurants as the new owner hereby know, that the premises are approved for the right purpose and use. Often when a disposal is made, the new renter needs to be approved by the landlord to assure that the renter has the necessary industry experience and quality to be able to continue the current rental agreement.

What is a disposal?

A disposal of a commercial lease means that the renter of some premises lets a new renter take over the lease agreement that has already been made. This means that the new renter takes over the lease agreement and the terms that has already been determined between the landlord and the former renter.

This means that the new renter continues the lease agreement with unchanged terms and with the same duties as the former renter, unless there has been made specifications for changes in the lease agreement in case of a disposal.

Normally it’s not necessary to make a new lease agreement between the landlord and the renter, but often a disposal agreement is made as an agreement between the current renter and the upcoming renter about the terms of the disposal. This is also called a purchase agreement.

Sometimes an allonge is made as a supplement to the existing lease agreement, and it confirms that the former renter resigns and that the new renter enters.

When can one use a disposal?

A renter of a commercial lease has right of disposal to let another renter in the same industry take over the lease on the same terms that was determined in the original lease agreement.

However, the landlord can object the disposal if there is doubt whether the new renter’s economy or lack of industry experience will be a problem for the acquisition of the lease agreement.

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