What Lease Requirements Must Be Completed Before Settlement?
Updated: Oct 24
GUEST AUTHOR | Blackhall & Co
Today’s guest post is by Blackhall & Co. Blackhall & Co helps buyers find businesses worth owning. Opinions expressed by guest authors are their own and do not necessarily reflect the views of Fairlane Finance.
Before settlement, the buyer needs the required lease documents, consents, security and insurance ready, with a clear agreement about when lawful occupation begins.
Lease requirements can become the final loose thread in an Australian accounting practice purchase.
The landlord may support the buyer and the commercial terms may be agreed, yet an unsigned assignment or unaccepted guarantee can still leave an essential settlement item unresolved.
At this stage, the question is what has actually been completed. Ask your solicitor to identify the premises conditions in your purchase contract and lease, then connect those conditions with the current funding timetable. The answer depends on your transaction and jurisdiction.
Lease requirements: the short answer
Confirm whether you need an assignment, a new lease or consent to another transaction.
Obtain the required landlord and other consents, with any conditions addressed.
Complete signing and the agreed arrangements for exchanging effective documents.
Arrange accepted security, guarantees, required insurance and occupation payments.
Confirm adjustments, access, any essential works and the current funding position.
Which premises documents must be completed?
Start with the transaction your solicitor has confirmed. An assignment transfers the existing tenant’s lease interest, while a new lease creates the buyer’s own arrangement. The guide to taking over a commercial lease explains the distinction.
A share purchase may instead require attention to a change-of-control provision or another consent requirement.
Ask for the final documents and schedules, including any deed of assignment, new lease, variation, guarantee or consent relevant to your deal. Check that they identify the correct tenant, premises, commencement date and agreed terms.
A last-minute change to the acquiring entity needs legal review and may also affect the finance documents.
Your solicitor should confirm the applicable state or territory law and whether retail leasing legislation covers these premises. An accounting office should not simply be assumed to fall inside or outside that regime. The Victorian Small Business Commission’s guidance states that Victorian retail leases must be written and signed by all parties, with a signed copy provided to the tenant.
That is jurisdiction-specific guidance, not a universal settlement rule.
Is the landlord’s consent effective?
A friendly email saying the buyer looks suitable may be useful progress, but ask whether it satisfies the required consent. Your solicitor should check the approval’s form, scope and conditions, including whether any other party’s consent is needed.
Record who must supply each missing item and who confirms it has been accepted.
For NSW retail leases, the NSW Small Business Commissioner’s transfer guidance describes a written consent request, supporting information and disclosure documents. It also discusses deeds involving the outgoing tenant, incoming tenant and landlord. Your solicitor needs to confirm which process applies and whether it has been followed, because statutory timeframes should not be used as a shortcut without advice.
Bring the final position back to your earlier premises and lease due diligence. If the landlord now requires different security or changes the permitted use, the completion package may no longer match what you assessed.
Surface that change before signing or authorising settlement.
Who signs, and when do the documents take effect?
Ask your solicitor who signs for each entity, whether witnessing or identity checks are needed, and how documents will be exchanged or held pending completion. A buyer-signed copy in an email folder does not confirm that the landlord and vendor have signed or that the documents are effective.
Separate the signing date, business settlement date, lease commencement date and possession date. They may coincide, but should not be assumed to do so. Confirm whether registration or further formalities are relevant and how they fit the agreed completion arrangements.
Keep the final executed version accessible to your solicitor and, where required, the funding team.
Are security, guarantees and insurance accepted?
The agreed security might be a cash deposit, a bank guarantee or another permitted arrangement. Check the amount, beneficiary, tenant name, required wording and delivery method. Our explanation of a commercial lease bank guarantee helps identify why obtaining an instrument and having it accepted are separate tasks.
Do not assume the vendor’s security automatically becomes yours.
Personal guarantees also deserve their own confirmation. Ask your solicitor who is giving a guarantee, what obligations it covers and whether outgoing guarantees or security are being released under the agreed arrangements.
Keep any reimbursement to the vendor distinct from the security the landlord requires from you.
Security handling varies. The Victorian commission’s guidance says a cash security deposit for a covered retail lease must be held in an interest-bearing account. Have your solicitor confirm the applicable handling requirements and the evidence needed in your case.
Include the deposit and any cash supporting a guarantee in your commercial lease cost budget so the same money is not counted twice.
Ask your insurance adviser to arrange the cover required by the lease from the relevant commencement or possession date, and obtain evidence acceptable to the recipient. business.gov.au’s insurance guidance distinguishes public liability, asset cover and professional indemnity. Cover for professional services does not automatically satisfy premises-related requirements.
Check the insured entity, address, dates and required limits rather than relying on the vendor’s certificate.
What payments and access need confirmation?
Have your solicitor reconcile rent, outgoings and other agreed adjustments with the final settlement statement. Clarify any prepaid amounts, outstanding invoices, rent in advance and separately payable lease costs.
An adjustment between buyer and vendor does not necessarily meet a payment obligation to the landlord.
The buyer should also confirm who will release keys, passes and alarm access, when access starts and whether any essential repairs or works must be completed first. The NSW Retail Tenancy Guide warns that possession or rent payments can start a lease even without signed documentation. It also recommends checking permitted use and necessary approvals.
Ask your solicitor to clarify any early access arrangement before accepting keys.
For a practice, accessible rooms and functioning essential facilities may matter immediately to staff and client appointments. Confirm the agreed evidence for any works, who checks completion and what happens if the premises are unavailable. Avoid treating possession as an informal favour while the legal arrangements remain unresolved.
How does this connect with available funding?
Tell your acquisition finance adviser about the final premises documents and any changes affecting the transaction. The guide to financing an accounting practice purchase explains the broader funding process. Ask for the current lender requirements, including any lease evidence needed, its review status and confirmation of the arrangements for releasing funds.
A legal completion item and a funding requirement may concern the same document but involve different reviewers. Ask your solicitor to confirm legal readiness and your acquisition finance adviser to communicate the current finance position within the agreed engagement.
Reconcile your contribution with deposits, insurance and occupation costs paid outside the purchase price.
An illustrative final-week check
Suppose an accounting practice buyer has signed the assignment and arranged insurance, but the landlord has not accepted the replacement security. The purchase contract also requires the assignment to be completed at settlement. This is an illustration, not a statement of standard lease terms or finance policy.
The solicitor checks the legal condition and follows up the landlord’s requirements. Your acquisition finance adviser checks any related funding condition. The buyer arranges the corrected security and obtains confirmation of acceptance.
If the date becomes uncertain, the buyer should seek the solicitor’s advice on the contractual response rather than assuming that an extension is automatic.
Frequently asked questions
Can settlement proceed while the lease remains unsigned?
It depends on the purchase contract, premises arrangement and funding requirements. Ask your solicitor to confirm whether completion is permitted and what risks or outstanding obligations would remain.
Does landlord approval mean the assignment is finished?
Not necessarily. Consent may have conditions, and documents or security may still need completion. Ask which requirements remain and who confirms the assignment is effective.
Can I use the vendor’s insurance?
Do not assume so. Ask your insurance adviser to confirm appropriate cover for the buyer’s entity and occupation dates, including the lease’s evidence requirements.
Do retail lease rules apply to every accounting office?
No universal answer applies. Coverage depends on the jurisdiction and premises circumstances. Your solicitor should confirm the relevant law before relying on retail leasing protections or procedures.
What if keys are offered before settlement?
Seek legal advice before taking possession. Confirm the purpose, access conditions, insurance and possible lease commencement consequences in a documented arrangement.
Finish with evidence of readiness
Before authorising completion, ask for a clear list of accepted documents, payments and remaining conditions. You should know when occupation begins and who confirms legal completion and funding readiness. That turns the promise of premises into an arrangement your practice can actually use.
