When buying or selling certain assets, there are several different transactions that the parties may engage in. One type of transaction that may be utilized is a sale leaseback.
What is a sale leaseback?
A sale leaseback is when one party sells an asset and then leases the item back from the purchaser. While this type of transaction can be used for a wide range of items, such as airplanes, a sale leaseback is most commonly used in real estate.
An example of how a sale leaseback may work with property is when an individual or corporation sells a building or house and then leases the property back from the person or business that purchased the location.
When the property is sold, the payments for the property will act as a loan. In addition, any money received can act as capital for the individual or corporation that buys the location.
Types of Disputes
There are a wide range of disputes that may arise from a sale leaseback. Some types of sale leaseback issues include but are not limited to: terms of the lease, which may involve who may use the property, any applicable payments and the lease time period; duty of repair, which includes who is responsible for fixing any maintenance issues at the property; early termination, which would arise when one of the parties choses to end the agreement prior the date shown in the lease; deposits, which may involve how much (if any) money is returned when the lease ends or is broken before the agreed upon date; and subleasing, which is when the location may be leased to a third party that was not originally involved in the lease.
Resolution
If and when a dispute comes up, there are several ways that the problem can be resolved. To begin with, the parties can review the lease to determine what the individuals or companies are responsible for. In addition, both sides may require an injunction to explore what actions are required by all individuals and companies to rectify the issues. Lastly, there may be monetary sanctions that are levied against the breaching party.
Conclusion
When an individual or business enters into a sale leaseback, it can be beneficial to consult a business attorney. The lawyer can explain any potential issues that may arise when a party enters into the agreement. In addition, the attorney will be able to discuss with the client what the benefits and drawbacks of the leaseback agreement are. At the same time, a lawyer can provide insight as to any potential issues and how the problem may be rectified before it becomes a larger issue down the road.
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