Landlord “ACT BLUR”, “went silent on deposit after handover.

A Potential 5 Figure F&B Contract Pitfalls

Excited to start your own food business, whether you are renting a factory, a central kitchen, a food shop or food stall in coffee shop or food court. At the start, one may be focusing on the rental and all other additional costs for service. However do pay attention at the handover clause and the return of the security deposit conditions. It may be a damper to consider this during the starting of a new venture, but believe me, it is important.

Especially dealing with sub-lessor landlord, coffee shop, food factory spaces etc. excluding government lease. Always check the timeline for the return of the security deposit, how long after the handover. And make sure it is stipulated in the contract. There are landlords who don’t state the timeline purposely. Sadly we knew of operators who met with such sub-lessor landlord. These sub-lessor landlord lease the food court from a building owner and operates it by sub-leasing it to multiple F&B vendors. Towards the end of the term with the building owner, the food stalls continues operation with the building owner but the sub-lessor landlord was not awarded continuation and he went away silently without returning the security deposits. This may happen with actual landlord as well not just sub-lessor ones.

Going to a legal tussle waste much time and money and also one might not know if the security deposits can be successfully retrieve from the company. One might think that I can seek the help of CASE or Small Claim Tribunal, however SCT does not administer commercial rental dispute due to its complication. Only mediation or civil litigation via lawyer is the only way.

So before you were to sign any private lease, due diligence and know your landlord is important. Also check the company paid up capital. And if such case were to happen, make a police report, hire a lawyer and sent letter of demand immediately.

This article seeks to educate tenants on the importance of the rental contracts seeks to provide knowledge and merchant resource support to food service operators. Share your experiences with us. Comment below.

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