We have recently sold tenanted investment properties where the banks have insisted on resolutions authorising the tenant’s representatives’s signature, before releasing the bond guarantees. Whilst the bank had good reason to do this, it had the effect of delaying transfer, inconveniencing all the parties concerned.
If you are planning to sell your commercial or industrial property you need to check all your leases and make sure the signatories have been authorized by a signed resolution. Sellers have had to ask their tenants to sign resolutions even though they had been in occupation of their premises for years. In most cases the tenants have cooperated, although this is an irritation for them. The purchasers have not been aware of this requirement and had approved the due diligence without resolutions authorizing the leases. This becomes a problem if the tenant refuses to sign a resolution and the sale is unsuspensive and the bank won’t produce the guarantees until the resolutions are in place.
Besides selling your property, if you wish to refinance the property, the bank will also look for resolutions. How many leases do you have without authorizing resolutions?
Another important aspect of signing leases is that the full names of the parties that are signing are clearly stated under the signature. If there is ever a dispute and you are looking at a “scrawl” of a signature years down the track, how do you identify who actually signed the document? The same goes for the witness who left the company many years ago. Who’s signature was that? This is particularly important for sureties.
