Restraint of trade is a common term used within a sale and purchase of a rent roll.
Restraint generally varies between 2-3 years, however, it is not usual to see a 5-year term if the business being sold is of a strong size and/or broad spread in location. A restraint of trade distance is pretty varied. Anything from a 10-25 km range is common.
What is commonly requested with a restraint of trade and unable to be granted when buying a rent roll is a restraint of trade against the employee’s of the business being sold ie; the property management and administration staff. This is a significant point as the risk on attrition can be mitigated substantially if the property management staff imparticular are transitioned with the rent roll itself. One way around this is to buy the company as a going concern as it is common for employers to have the restraint of trade clauses in their employee’s job descriptions.
Restraint of trade on the acquisition of a rent roll is both common and very important, so if you are not sure about this aspect of a sale seek advice from your legal representative or indeed pick up the phone and give me a call or send me an e-mail.
Hamish has over 17 years of experience within the property management industry and has experience throughout New Zealand and Australia as a manager, principal and consultant. He utilised all of this experience to form a property management business that he expanded between 2009 and 2016 into 7 locations around New Zealand.