Ask Gulf News: Can a factory owner sell the business without the landlord’s consent?
Question: I own a factory that I intend to sell. The premises on which the factory operates are leased, rather than owned by me. Am I entitled to sell the factory without consulting the landlord? If I proceed with the sale, will the purchaser automatically become the new tenant of the leased premises? Answer: You are generally entitled to sell the factory as an establishment and complete the…
A factory owner who intends to sell their establishment may wonder if they are required to obtain the landlord's consent before finalizing the deal. The answer to this question hinges on the specifics of the lease agreement. If the lease was signed in the owner's personal name, they must inform the landlord of the sale. The purchaser will not automatically assume the role of the tenant.
However, if the lease was signed under the factory's name, the sale might not impact the existing lease. Despite this, the landlord retains the right to pursue legal action, seeking to terminate the lease based on certain conditions. These conditions include the purchaser's ability to provide adequate security and the lack of actual harm to the landlord.
This scenario is covered under Article (728) of the Civil Transactions Law. The law states that if the lease pertains to a property where a factory or a shop has been established, and the lessee must sell the factory or shop due to necessity, the court may order the lease to continue if the purchaser provides sufficient security and the lessor incurs no actual harm.
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