Q: I’m in the process of taking over the lease of a restaurant. It’s a great property in an ideal location: without wanting to slag anyone off, I think it’s only failing because of the owner’s incompetence. Things have gotten a bit complicated, however.


Firstly, the lessee’s agent has been pressuring me to give ‘key money’ of about €15,000. I thought this stuff went out with the 100% mortgage? More seriously, after my solicitor asked for a health cert and fire cert, I got a call from the agent. He claimed that they don’t need a fire cert, and that they never registered with the health board. He’s also been unwilling to confirm in writing that they’re up to date on rates and other charges. I’m pretty alarmed by all this – am I right to be? Should I try and make this sale work, or just walk away?


A: Run a mile. I think you’re right in your judgement of the owner, and his agent seems to be cut from the same cloth. To take the red flags one by one: yes, ‘key money’ is very much a thing of the past, especially at a time when there are so many sites vacant or open to moving. To ask for it now, particularly at the stage where the solicitor is involved, is a little cheeky.

If the restaurant is currently trading, it should have a health cert, and a fire cert should also be in place. Moreover, depending on the condition of the property, getting the certificates needed may not be entirely straightforward. The fact that this hasn’t been sorted out yet may indicate that the restaurant owner knows this.

As for rates, you’re right to be anxious as well. In theory at least, the person actually occupying a property is liable at the time that a rate is ‘struck’ by the local authority. However, if an occupier doesn’t pay up, there’s provision under law to pursue the subsequent occupier. This has a two-year restriction: if a rate was struck in May 2010, for example, the subsequent occupier can’t be pursued for them beyond May 2012. However, taking control of this property without getting confirmation that rates have been paid up could leave you with a bill for two years of arrears.

In other words, cut off negotiations immediately. Even if the previous owner and his agent were exemplary, the absence of key certification should make anyone hesitant about taking over the lease. As it stands, they sound about as professional as the keystone cops, and only a very naïve individual would proceed from this point.