Question from a reader:
I want to transfer a building on land with a business leasehold, but the landlord is likely to demand a transfer approval fee of 10% of the leasehold value. The contract states that transferring the leasehold without the landlord’s written consent may result in contract termination. If the contract is terminated, I would have to return the
land cleared, and if there are still buildings on the land, I would also be obligated to pay rent monthly. In this case, do I have to pay the transfer approval fee?

Considering the Issues of Transfer and Approval Fees for Business Leaseholds

Hello everyone! This time, I would like to focus on an important topic regarding business leaseholds, particularly the transfer approval fee. Contracts and laws related to leaseholds can be surprisingly complex and often require specialized knowledge. I have entered into various contracts in the business world, but issues related to leaseholds can be particularly troublesome. Now, let’s dive into a specific case.

Background of the Case

According to the reader’s question, they are considering transferring a building on land with a business leasehold. However, they may be asked by the landlord to pay a transfer approval fee of 10% of the leasehold value. The contract clearly states that transferring the leasehold without the landlord’s written consent could lead to contract termination. This is indeed a very tricky situation. I have also had experience renting business land in the past. During that time, I checked the rent and contract conditions multiple times, but I didn’t think deeply about the clauses regarding transfer when signing the contract. Based on that experience, I want to delve into this issue further.

Should You Pay the Transfer Approval Fee?

First, let’s look at the legal aspects of the transfer approval fee. The Leasehold and Land Lease Act requires the landlord’s consent for the transfer of leasehold rights. This means that the landlord has certain authority over how the land is used. It is common to be asked for a transfer approval fee, but the amount and necessity of payment depend on the contract’s content. In the reader’s case, the landlord’s request for 10% as a transfer approval fee can be seen as a legitimate demand according to the law. However, it is necessary to determine whether this demand is reasonable by referring to the contents of the contract and past cases.

Risk of Contract Termination

Now, if the transfer approval fee is not paid, there is a risk of contract termination. This is very troublesome. If the contract is terminated, not only would there be an obligation to return the land cleared, but there would also be a monthly rent obligation for any remaining buildings, which increases the financial burden. A friend of mine had a similar experience. He operated a store on leased land, but due to neglecting negotiations with the landlord during the transfer, he suffered significant losses. In the end, he had to pay the transfer approval fee, which was more than he expected, greatly impacting his business operations. To avoid similar risks, it is crucial for readers to maintain good communication with their landlords.

Negotiation Points

So, how should you negotiate the transfer approval fee? Here are some points to consider.

1. Review the Contract

First, carefully read the contract again. It is important to check whether there are specific clauses regarding transfer and the approval fee. Additionally, if there are past transfer cases, use those case studies as references.

2. Value Communication with the Landlord

Building a good relationship with the landlord is key to smooth negotiations. If both parties can respect each other’s opinions and proceed with the transfer in a mutually agreeable manner, there may be more flexibility regarding the approval fee.

3. Seek Expert Opinions

In some cases, consider consulting a lawyer or real estate expert. They can provide legal advice and specific guidance on how to proceed with negotiations.

Conclusion

The issues surrounding the transfer of business leaseholds are surprisingly complex and involve many factors. Understanding that the payment of the transfer approval fee can vary based on the contract’s content and the relationship with the landlord is crucial. It is important to take measures to minimize risks. From my own experience, I have realized that understanding the contract and maintaining a good relationship with the landlord contribute to business success. Readers, why not take a step forward to advance your business in a better direction? And remember, if you have any concerns, don’t hesitate to consult an expert! See you next time with another interesting topic!