What Should I Ask My Business Attorney If I Am Selling My Business With A Commercial Lease?

The first thing you should ask your attorney is: "Can we sell a business with a commercial lease?" The second question should be the following: "What obstacles do we need to know about and how can we overcome those potential obstacles?"

Questions regarding your commercial lease should be answered by a legal professional. Legal advice is highly recommended before making any major business decisions or signing any type of agreement.

What Are the Obstacles Involved With the Buyer?

Does The Buyer Want To Assume All Obligations and Space?

Even if the buyer will not take over your lease, they still may want to "take possession" of the space. If this is the case you should work to negotiate a deal with them that provides for termination or sublease provisions that are favorable towards you. This usually comes in the form of either terminating early or subleasing at a discounted rate.

What Obstacles Will the Seller Face With The Landlord?

Business owners who lease their property shouldn't expect potential purchasers to take on these existing leases without careful consideration. At best they'll present unnecessary obstacles; at worst they'll turn away interest entirely. This is true even when the lease in question is an operating lease, which doesn't provide the new owner with any rights to use or possess the property beyond what is spelled out in the agreement.

Have you taken any action that is a violation of your lease obligations?

The first thing a seller needs to do is carefully go over his/her lease and determine whether or not they have been in breach of it. This can be a rather complex process that requires the assistance of an experienced commercial real estate attorney who understands all your business's obligations under the leases. 

Also, it would be helpful for you to obtain any copies of the late payment notifications that may have been sent by your landlord. Keep in mind that if you are sued by your landlord for breaching the lease(s) before the sale transaction closes, this could cause your buyer to back out of their contract commitment.

Obstacles Regarding Lease Negotiations

Can I change anything about my lease before selling my business?

Are your lease payments higher, lower, or about the same as what a new lessee could lease the space for today? If your lease payments are “above market,” will the Landlord renegotiate the rate with the Buyer?

This may be obvious, but doing some research to see if your Rent is still comparable to new businesses popping up on your block is very important. You’ll want to be able to easily convince the buyer to take over the lease and continue by knowing you have a good deal on monthly rent. 

If you can ask local businesses the cost of their rent this may be the easiest option instead of reaching out directly to a broker or real estate agent. Sometimes they may not always be transparent with all the information up front. If you find you need to be more competitive with your lease then you may want to consider hiring a lawyer to negotiate the price for the Buyer.