Sale-leaseback

For example: An owner-user frees up capital with a sale-leaseback. (Illustration only, not a real deal.)

This is a general industry term with no single official definition. Your lease or contract wording controls.

What I’d tell a friend

A sale-leaseback can free up capital without moving, but you trade being an owner for being a tenant. Negotiate the lease as carefully as the sale price.

Why it matters to you

You free up cash and keep using the property, but you give up ownership and become a tenant. The rent, term and renewal rights decide whether it works for you long term.

How to use it in your deal

Sellers should weigh the cash against paying rent for years, losing future appreciation and control of the property. Negotiate rent, term, renewals, repair duties and options to buy back. Get tax advice, since the sale can trigger capital gains and recapture. Buyers should assess the tenant's credit as much as the building, since that's what supports value.

Lenders will look at both. Read the lease as if the tenant might fail: what happens to the building if it leaves, and how hard would it be to re-lease a specialized plant? Tenants who stay after the sale should think about future expansion: once you're a tenant, adding space needs the landlord's consent. Ask for a right of first refusal or option if you might want the property back. Owners considering this should compare it with a mortgage refinance, which keeps ownership but adds debt.

Mistakes I see

Rent set too high to boost the sale price. Ignoring tax effects. Giving up control without options. Buyers ignoring the tenant's financial health.

In BC and Vancouver

Ordinary sale and lease rules apply. Federal tax rules affect the seller. Property transfer tax applies to the buyer.

Official sources: Income Tax Act (Justice Laws) · Property transfer tax (Government of BC) · CanLII (court decisions)

How it works

You sell a property you occupy and sign a lease to stay on. The buyer gets a building with a tenant in place, and you get cash to use in your business.

Price and rent are linked. A buyer pays more when the rent is higher and the lease is longer, so pushing hard on price usually means a higher rent for years.

What to watch

Look closely at the lease term, renewal options, who pays for major repairs and what happens if you want to expand or leave early. Those terms shape your business for a long time.

Selling can trigger tax on any gain, so speak with your accountant before you commit, and have a BC lawyer review the sale and lease together.

Questions to ask before you sign

• What rent and term make sense?
• What are the tax consequences?
• Can I buy it back?
• Who handles repairs?

Leased-fee value tracks the tenant

In a sale-leaseback the investment is largely the lease. Term, rent sustainability, expense responsibility, and the tenant’s covenant drive price more than paint colour.

Absolute net versus ordinary triple net changes who pays for structure and capital. Tax results need an accountant before anyone calls it a “refinance alternative.”

Use the encyclopedia definition as a map, then read the deal pages for process.

Keep reading

Related terms: Owner-user

• Sale-leaseback for BC business owners
• Selling a business that owns or leases its real estate in BC

Working through this right now? Questions are free. Book a 15-minute call or call or text 604 256 2002, and I’ll give you a straight answer.

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General information for British Columbia only. It isn’t legal, tax, accounting or financial advice, laws and rates change, and reading it doesn’t make you my client. Any numbers or scenarios are hypothetical. Check the linked official source and talk to a lawyer, accountant or other qualified professional before you act or sign anything. See the terms and disclaimer.