Negotiations to set up the commercial use of a property are not always easy. Sometimes even after the signing of a contract, events compel the signatories to the agreement to come back to renegotiate the deal. This may result in a contract novation.
The Motley Fool explains that novations are actually common in property contracts. If you are not familiar with novations, it is important to understand how they work as they can dramatically change your legal rights and protections.
Novations may alter various provisions
You or your contracted parties may renegotiate for different reasons. You may want to alter the terms of your property rent or lease. You might need to extend the contract timeline. Sometimes one party wants out of the contract completely, and another party agrees to assume the terms of the previous party. This allows a different person or business to buy, rent, finance, or control a property.
Novations require a new contract
You cannot institute a legal change in your current contract with a verbal agreement or by simply erasing terms in the old contract and writing in new ones. A legal novation requires you and your contracted parties to compose and sign a new contract.
A novation renders your previous contract void. Since your new contract establishes your legal relationship with other parties, you should be sure that any provisions you want from your old contract are in the new agreement.
Be alert to novation requests
If you believe your contracted parties could ask you for a novation, do your best to make yourself available. Sometimes contracted relationships fall apart because one party does not respond to a request to change a contract in time. Responding in a timely manner may also prevent the negotiation process from dragging out.