Commercial Leases Are Crucially Important to the Success of Your Business
Don’t Be Penny Wise and Pound Foolish When It Comes to Negotiating a Lease
This rational – as referenced in a previous post, and a recurring theme throughout this blog – falls under the old saying “penny wise, pound foolish”. The reason being is the majority of the time it is much better to have an attorney experienced in commercial leasing review the lease prior to signing it. This is due to the fact that an experienced leasing attorney will understand how the wording can effect the value of a tenant’s business. For example, depending upon how the wording is structured in the assignment section of the lease may impact whether or not the landlord’s consent is required for the sale of shares in a corporate tenant, as it may be deemed an assignment under the lease.
If such consent is required, it can devalue the worth of the business, because it creates an additional hoop that the parties (the business owner and purchaser) need to jump through (i.e., the landlord’s consent). Depending on what the lease says, if the landlord withhold’s its consent as permitted under the verbiage of the lease, the deal can die and there is nothing the parties can do about it. Understanding this risk, many potential purchaser’s do not want to risk bidding on a business and spending money on diligence, when they not only have to obtain the tenant’s consent, but also the consent of the tenant’s landlord; which thus, devalues the business.
*The information in this blog posting is for general information purposes only. Nothing in this blog or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information in this blog is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.