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| What is a Traspaso in Spain? Is this different to a Lease? Can I sell the business? |
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| Bars for sale in Benidorm - Albir Bars for sale - La Cala Finestrat bars for sale - Benidorm Restaurants For Sale |
| Spain Business Guide Buying a business on a Traspaso Business Transfer Agent Benidorm & Costa Blanca Spain FREE advice for everyone |
What is a Traspaso? (Transfer)
A “traspaso” is the selling of a business held within a property rented
from a third party. In the Urban Rental Law the traspaso was substituted
by cesion de contrato or ceeding of contract (sublet). Previously in Law
the owner of the premises would be compensated when a traspaso was
made, usually 10% of the selling amount. However, the modification of
the Law has done away with this. However it is still common practice to
compensate a landlord if you wish to sell your business. Usually 10% but
can be as much as 20%. Never sign one of these contracts without
first seeking advice from a proper Solicitor.
A Traspaso no longer has any real validity in Spain, you should try to
negotiate a proper lease. This has much more room for negotiation and
flexibility. However a traspaso is often the only way to buy a small
business or bar in Spain and is still widely used. (Strange but true). In
reality what you usually get is a 5 + 5 year rolling rental contract. This is
quite safe provided that the contract stipulates your right to another term
at the end of the 5 years. Sadly some people do not get an legal advice
and end up sigining a short term contract, or a rental contract with no
right to sell the business on. You have been warned!!
Questions you should ask.
Do you have a right to sell the business?
At the end of 5 years do you have the right to a further term?
If you sell is a percentage payable to the landlord?
What are terms of rent increases?
This is why a good independent lawyer is essential
The old traspaso was very inflexible and tended to favour the landlord, with a
lease (cesión) you are able to agree much better terms but with this can come much
misunderstanding so you should never agree to sign such a document without
having the terms explained by your lawyer first.
You should always look for terms which allows you to sell the business on and
upon renewal allows you to continue with the same terms. Many Traspasos are
simply straight rental agreements which offer no right for you to sell your business.
You should negotiate the longest lease possible up to 20 years. This ensures that
the landlord can only increase rent by the cost of living where as he may put it up by
as much as 30% with a new lease.
It is also vital to have written into the contract what percentage of any sale the
landlord will want. It is usually 10% or 20% and is quite normal in Spain. Some
greedy landlords will try for much more in which case you should move on to another
business or local.
The most common pitfall for new business people to Spain is that they are offered
a fixed term rental contract which is masquerading as a lease giving no rights to sell
the business on and no rights to continue renting the local at the end of the term.
Some landlords are not aware that the law has changed and still try to offer a
Traspaso. Whatever you are offered only the fool hardy will proceed without a
lawyer. This is also the reason we absolutely recommend you do not use the same
lawyer as the landlord or seller.
Renting business premises in Benidorm whilst not that common can be one way
to set up business without much financial outlay and long term commitment. You
would normally have to pay a couple of months deposit and a month in advance.
The contract would usually be for one year initially and should have a clause
allowing you to continue.
The downside is that if your business is a success you may be left without any
premises at then end of the year and you would find it very hard to sell the business
on a rental contract. The most important part of this type of contract is the
termination clauses which should be as far as possible in your favour to allow you to
remain at the local.
Provided you pay the rent on time (always get a receipt) as a tenant it can be
difficult to remove you from the premises as the law in Spain is very favourable to
tenants. This is why you must make sure you have a very tight contract and a good
legal team.
Simply be very careful when entering into this type of agreement unless it is your
intention to only be in Benidorm for a few years and it is not important to you to sell
your venture on. Also see important advice on paying deposits
Next page - Getting to know other business owners
A “traspaso” is the selling of a business held within a property rented
from a third party. In the Urban Rental Law the traspaso was substituted
by cesion de contrato or ceeding of contract (sublet). Previously in Law
the owner of the premises would be compensated when a traspaso was
made, usually 10% of the selling amount. However, the modification of
the Law has done away with this. However it is still common practice to
compensate a landlord if you wish to sell your business. Usually 10% but
can be as much as 20%. Never sign one of these contracts without
first seeking advice from a proper Solicitor.
A Traspaso no longer has any real validity in Spain, you should try to
negotiate a proper lease. This has much more room for negotiation and
flexibility. However a traspaso is often the only way to buy a small
business or bar in Spain and is still widely used. (Strange but true). In
reality what you usually get is a 5 + 5 year rolling rental contract. This is
quite safe provided that the contract stipulates your right to another term
at the end of the 5 years. Sadly some people do not get an legal advice
and end up sigining a short term contract, or a rental contract with no
right to sell the business on. You have been warned!!
Questions you should ask.
Do you have a right to sell the business?
At the end of 5 years do you have the right to a further term?
If you sell is a percentage payable to the landlord?
What are terms of rent increases?
This is why a good independent lawyer is essential
The old traspaso was very inflexible and tended to favour the landlord, with a
lease (cesión) you are able to agree much better terms but with this can come much
misunderstanding so you should never agree to sign such a document without
having the terms explained by your lawyer first.
You should always look for terms which allows you to sell the business on and
upon renewal allows you to continue with the same terms. Many Traspasos are
simply straight rental agreements which offer no right for you to sell your business.
You should negotiate the longest lease possible up to 20 years. This ensures that
the landlord can only increase rent by the cost of living where as he may put it up by
as much as 30% with a new lease.
It is also vital to have written into the contract what percentage of any sale the
landlord will want. It is usually 10% or 20% and is quite normal in Spain. Some
greedy landlords will try for much more in which case you should move on to another
business or local.
The most common pitfall for new business people to Spain is that they are offered
a fixed term rental contract which is masquerading as a lease giving no rights to sell
the business on and no rights to continue renting the local at the end of the term.
Some landlords are not aware that the law has changed and still try to offer a
Traspaso. Whatever you are offered only the fool hardy will proceed without a
lawyer. This is also the reason we absolutely recommend you do not use the same
lawyer as the landlord or seller.
Renting business premises in Benidorm whilst not that common can be one way
to set up business without much financial outlay and long term commitment. You
would normally have to pay a couple of months deposit and a month in advance.
The contract would usually be for one year initially and should have a clause
allowing you to continue.
The downside is that if your business is a success you may be left without any
premises at then end of the year and you would find it very hard to sell the business
on a rental contract. The most important part of this type of contract is the
termination clauses which should be as far as possible in your favour to allow you to
remain at the local.
Provided you pay the rent on time (always get a receipt) as a tenant it can be
difficult to remove you from the premises as the law in Spain is very favourable to
tenants. This is why you must make sure you have a very tight contract and a good
legal team.
Simply be very careful when entering into this type of agreement unless it is your
intention to only be in Benidorm for a few years and it is not important to you to sell
your venture on. Also see important advice on paying deposits
Next page - Getting to know other business owners
