|
IT'S ALL IN THE LEASE Consider the lease before you buy. Seek professional advisers, experienced real estate brokers, and attorneys who can help you negotiate new property leases, if available, or assist you with a lease assignment. Problems with leases are a major stumbling block in buying a restaurant. Carefully consider these points:
- Renewal options in a long-term lease; rate increases; ability to negotiate favorable provisions
- Landlord's lien provisions
- Merchants' association membership requirements
- Common Area Maintenace (CAM) clauses; these may include insurance, taxes, and maintenance
- Right to assign or sublease space provisions
- Automatic cancellation clauses, kick-out clauses, and default provisions
Many leases are Net-Net-Net (NNN) with a tenant agreeing to share, based on square footage, building insurance costs, taxes, and CAM with other tenants in a shopping center. Taxes and insurance costs are usually easy to verify; CAM costs, however, can cover a multitude of expenses, such as snow removal, parking lot resurfacing, and holiday decorations. Carefully consider every aspect of the lease before you buy.
|
