WA Starting a Business - Lender has Not Given Money for Lease?

[David Scandrett]

Hi, I was just wondering if there is anything you could do to help my bad situation.

Meant to be starting up a new gym business franchise in Jindalee, WA.

I have signed offer to lease. My friend(lender) is not giving me the money for the business which is loaned due to now owing the ATO a large sum of money.

I have asked for the money since 30th of April 2015, and he has still not come up with the money, I am running out of time as the landlord has almost finished the building and it’s at the handover stage, but I have no money to start the business or pay for bills, fitness equipment, etc.

A lawyer drew up a loan contract, PPSR and profit share agreement so it is all above board.

Is there anything I can do to get myself out of this awful situations?

Thanks in advance

 

[Ivy]

Hi David,

You will need to pursue your friend for breach of contract. Have you contacted your lawyer? You should speak with them as soon as possible.

 

[David Scandrett]

Hi Ivy, No I haven't yet he has given me another private lenders phone number as of today at about 10.30am if this lender doesn't pull through then I have no other option, Do you think the landlord will let me off the hook if I have evidence of loan contracts etc and the lender not paying up?

 

[Ivy]

Hi David,

Even if you do manage to get another private lender on board, your friend has still breached the contract. And if you go with an unknown lender you could be looking at higher interest rates or other less favourable terms than what was in the agreement with your friend.
Also, unless you have some personal friendship with this landlord (and maybe even if you do), they will probably chase you to enforce the contract that you may be about to breach. After all they could end up being substantially out of pocket as well. You can't get out of your obligations to your landlord just because someone else has breached a contract with you unless the contract with your landlord was contingent on you getting money from this lender.

I definitely think that the smartest option is to get onto your lawyer asap, especially before agreeing to anything with another lender.

 

[David Scandrett]

Here is a copy of the important parts in the lease Ivy, may be a way out?

1.1 Delays in construction
If the Landlord's Works are not completed by the Anticipated Date for Completion of the Landlord's Works by reason of strike, lockout or other industrial disturbance, accident to the building works, unavailability of labour or materials, building industry or public holidays, weather, or any cause whatsoever beyond the reasonable control of the Landlord, the Anticipated Date for Completion of the Landlord's Works shall be extended by the period of such delay, as to which period a certificate by the Landlord's Building Designer or Project Manager shall be conclusive in the absence of manifest error.
1.2 Termination of this deed
If the Certificate of Practical Completion has not issued on or before the Last Date for Completion of the Landlord's Works, either the Landlord or the Tenant may at any time after that date (but before the issue of the Certificate of Practical Completion) give not less than 30 days written notice to the other of them of its intention to terminate this Agreement, and if the Certificate of Practical Completion has not issued before the expiry of the notice period this Agreement shall be at an end and neither party shall have any claim against the other in respect of this Agreement or such termination.


1.1 Completion of Lease
The Tenant hereby authorises the Landlord and the Landlord's solicitors to complete the Lease by the insertion in the Lease of:
(a) the then current description of the Leased Premises;
(b) the then current title reference of the Land;
(c) the Lease Commencement Date;
(d) the initial Rent;
(e) a current plan of the Centre and identifying the Leased Premises; and
(f) such other details as may be necessary to complete the Lease.


1.1 Certificate by Landlord's Building Designer or Project Manager
If a dispute arises as to whether the Tenant's Works have been completed, a Certificate from the Landlord's Building Designer or Project Manager will be final and binding upon the parties.

1. ANTICIPATED DATE FOR COMPLETION OF LANDLORD'S WORKS

31 March 2015

2. last date for completion of landlord's works

30 June 2015

3. term of lease

Ten years with the tenant having the right to prematurely terminate the lease on the 5th anniversary of the Lease Commencement Date by serving written notice on the Landlord to that effect on or before the 4th anniversary of the Lease Commencement Date.

4. estimated initial annual rent

$72,000.00 per annum (plus GST) calculated in accordance with the following formula:

A x $198.90.00 (plus GST) per square metre

1.1 Handover of Leased Premises

Nothing herein contained or implied shall compel the Tenant to take hand over of the Leased Premises between 15 November 2014 and 10 January 2015.

 

[Ivy]

Has the landlord completed the works as per the contract? If he/she has, then from what you said I cannot see why you would be able to get out of the lease. The landlord has invested a lot on the reliance that you will be using the premises. You really need to see a solicitor and go after the lender for breach of contract...