What changes if I sell my gas station but keep the land?
You become the landlord of a fuel site. Agree in writing who owns, maintains and eventually removes the tanks, lines and canopy. Line up the lease term with the fuel supply agreement, expect the buyer’s lender to study the lease, and ask your lawyer about the site’s history while you still own it.
Selling the business and keeping the land means the owner receives rent rather than running the site. It also changes your role. You stop being the operator and become a landlord to a tenant who sells fuel on your property.
Who owns and maintains the tanks
The tanks, lines and canopy stay on your land. Settle in writing who owns each of them, who maintains and monitors them, who pays for repairs and who removes them at the end. Do not leave it to habit. Ask your lawyer to draft it clearly, so nobody has to rely on memory years from now.
The supply agreement and the lease
A fuel supply agreement may be signed by the landowner or by the operator, and its term needs to line up with the lease. If the lease ends before the supply agreement, or the other way around, someone is stuck. Ask your lawyer who should sign what. A buyer’s lender will set its own terms and may ask about the length of the lease and the renewal terms.
What you will need from the tenant
Spell out what you need from the operator: records on the tanks, proof of insurance, access for inspections and notice of any problem. Decide how rent is set and reviewed. Think about how you would act if the tenant stopped paying or wanted to leave. Ask your lawyer to check that the lease addresses each of these.
The site’s history
- Ask your lawyer what responsibility you keep for the land while you own it.
- Gather any past reports and records on the site.
- Ask whether a buyer or lender will want updated reviews.
- Talk to your accountant about how the sale and the rent are treated.
Related reading
12 pages on the same subject, grouped by topic.
Valuation
Buying
- Expert answerBuying a gas station with the property or on a leased site: what changes?
- Expert answerHow do gas station owners make money: the fuel or the store?
- Expert answerHow do I check a gas station’s fuel and store sales separately?
- Expert answerWhat should I ask about a sign shop’s backlog of quoted but unsigned jobs?
Selling
- Expert answerWhat will a buyer’s lender want to know about my gas station?
- Expert answerHow should I present fuel, store and car wash income when selling my gas station?
- Expert answerWhat costs come with selling a convenience store?
- Expert answerHow can I make my convenience store less dependent on me before selling?
- GuideSelling a convenience store in Canada
- GuideWhat do I need to do to sell a convenience store in Ontario?
Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernment13 terms you need to understand before signing your commercial real estate lease
- 02Business Development Bank of CanadaGovernmentMajor pitfalls to avoid when negotiating a purchase agreement
- 03Business Development Bank of CanadaGovernmentHow to minimize negotiations when selling your business
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