{"id":876,"date":"2016-06-16T00:00:00","date_gmt":"2016-06-16T00:00:00","guid":{"rendered":"https:\/\/www2.businessbroker.net\/blog\/2016\/06\/16\/lease-considerations\/"},"modified":"2016-06-16T00:00:00","modified_gmt":"2016-06-16T00:00:00","slug":"lease-considerations","status":"publish","type":"post","link":"https:\/\/www.businessbroker.net\/blog\/buying-a-franchise-or-business\/lease-considerations\/","title":{"rendered":"Lease Considerations"},"content":{"rendered":"<p>The largest percentage of businesses sold lease a building or space in which to operate. &nbsp;Because that can sometimes take longer than expected, it is important to start the process of obtaining a lease immediately after a Letter of Intent or Offer to Purchase is agreed upon by the buyer and seller. &nbsp;Many times, the landlord may live in another city, state or country. &nbsp;It may be possible for the buyer to sublease or get an assignment from the seller; but the seller&rsquo;s choice is usually for the landlord to write a new lease for the buyer, who is the tenant. &nbsp;A security deposit will be required. &nbsp;The seller will get his\/her security deposit returned, and the tenant will provide a security deposit to be held by the landlord without liability for interest and as security for the performance by the tenant of tenant&rsquo;s &nbsp;covenants and obligations under the lease. &nbsp;It will not be considered an advance payment of rent. &nbsp;Never close without a signed lease, assuming the lease will be completed &nbsp;soon after closing. &nbsp;For most businesses, it would certainly decrease the value if the lease fell through and the buyer had to relocate. &nbsp;If the owner of the business owns the building, it would obviously take a shorter amount of time to get a signed lease.<br \/>\n<span class=\"Apple-tab-span\"> <\/span><\/p>\n<p>Your landlord or business broker will write the lease for you, but it is always a good idea to have your attorney review it. &nbsp;There are many items to consider and include in a lease, and this article is to make you aware of some of the important considerations.<br \/>\n<span class=\"Apple-tab-span\"> <\/span><\/p>\n<p>When considering the term of the lease, think about the importance of the location to the success of your business. &nbsp;A one-year lease sometimes sounds good to buyers, but a lease for three to five years actually protects you more, along with a renewable extension clause for another three to five years or the length of the original lease. &nbsp;If you are buying a profitable business and have done your due diligence, your likely chance of failure is small, so you want to know you&rsquo;ll be able to remain in the location where the business has a history of profitability. &nbsp;The amount of rent and the expected increases will be included, as well as a default clause. &nbsp;The rent must be fair and in line with the current market rate. &nbsp;The lease and renewable clause usually require some negotiation.<\/p>\n<p>Another common negotiation is for repairs. &nbsp;It is common for the tenant to make necessary repairs to the leased premises at his\/her expense except for major mechanical systems or the roof. &nbsp;Sometimes landlords will offer a lower rent payment for the first year to help the new owner get started. &nbsp;The landlord wants the business to stay in its location, but the written lease protects the tenant from a change of plans of the landlord or the estate. &nbsp;As none of us know what the future holds, it is important to have everything in writing, and yes, even with a close friend.<\/p>\n<p><span class=\"Apple-tab-span\"> <\/span>The lease will state the purpose for the use of the premises and the ability, with landlord&rsquo;s permission, to remodel, redecorate, and make additions, improvements and replacements of and to all or any part of the leased premises from time to time. &nbsp;These leasehold improvements are considered an added value to the business.<br \/>\n<span class=\"Apple-tab-span\"> <\/span><\/p>\n<p>Taxes and insurance will be included in the lease. &nbsp;The landlord should pay all general real estate taxes and installments of special assessments coming due during the lease term, along with personal property taxes on the landlord&rsquo;s personal property. &nbsp;The tenant will be responsible for his\/her personal property taxes at the leased premises. &nbsp;If the seller is pleased with the business insurance agent, it is wise for the buyer to look over the policy and speak with that agent. &nbsp;It&rsquo;s always good to comparison shop, but this would be a good place to start and possibly start with that agent and insurance and compare later. &nbsp;Included in the lease will be the specifics of what will be covered by the landlord&rsquo;s insurance and what will be covered by the tenant&rsquo;s.<br \/>\n<span class=\"Apple-tab-span\"> <\/span><\/p>\n<p>The lease will address parking specifications for the tenant, employees and customers. &nbsp;Depending on the location of the business, it may be necessary to pay parking for space in a structured parking area. &nbsp;However, most small businesses will have ample parking next to the business.<br \/>\n<span class=\"Apple-tab-span\"> <\/span><\/p>\n<p>This short article does not include everything in a lease. &nbsp;As I mentioned earlier, read the lease presented to you and ask your attorney review it.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The largest percentage of businesses sold lease a building or space in which to operate. &nbsp;Because that can sometimes take longer than expected, it is important to start the process of obtaining a lease immediately after a Letter of Intent or Offer to Purchase is agreed upon by the buyer and sel<\/p>\n","protected":false},"author":3,"featured_media":75,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-876","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-franchise-or-business"],"yoast_head":"\n<title>Lease Considerations - Blog<\/title>\n<meta name=\"description\" content=\"Lease Considerations - Read now on BusinessBroker.net&#039;s Blog\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.businessbroker.net\/blog\/buying-a-franchise-or-business\/lease-considerations\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lease Considerations\" \/>\n<meta property=\"og:description\" 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