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The Lease: Buyers and Sellers Be Aware!

The lease is an important issue and, in many cases, a major issue. Whether you are buying or selling a business, it's important to understand that, if the real estate is not included, the lease is a critical element of the sale process.

There are three ways the transfer of the lease can be handled:

1. A new lease - A new lease can be entered into by the lessor and the buyer.
2. A sub-lease - This can be negotiated between the seller and the buyer. In a sub-lease, the seller of the business becomes the landlord. The exsisting landlord must always approve the sublease.
3. The Assignment of the Lease - This is the most common method of transferring the lease. The seller simply assigns the existing lease to the buyer. The buyer assumes responsibility for the lease, and in most cases, the landlord must approve the assignment. Sellers should be aware that, in most cases, they are still responsible for the terms of the lease.

Sellers should take a look at the lease on their business and ask themselves the following questions:

1. Is the lease long enough and the rent low enough to make the business attractive to a potential buyer?
2. Is the rent consistent with similar businesses in the area?
3. Are there any terms or conditions of the lease that might be unfavorable in the eyes of a potential buyer?
4. Are you on good terms with the landlord- and can the lease be transferred without any hitches?
   Your business broker is a good source to review the lease and its terms from a business sale perspective.