Q&A
Q: I’m planning to sell my business and assign the lease agreement. Will I be at risk if the buyer of my business doesn’t pay the rent?
A: Yes. Most lease agreements state that the original tenant (assignor) is not released from liability – only that the purchaser (assignee) is added to the existing agreement. Therefore, the landlord has both parties on the hook if the rent is not paid. The Lease Coach negotiates with the landlord to have your liability expire six to 18 months after the assignee takes over – provided that all rents are current.
Q: I have never met my landlord. The property manager drops by once per year to say “hello.” At The Lease Coach seminar, you recommended that tenants get to know these people; however, they don’t seem to be that accessible. Is meeting really necessary?
A: No, it’s not necessary – but it is smart, and here’s why. At some point, you will need to negotiate a lease renewal with your landlord or you may need a favour – maybe your heating, ventilation and air-conditioning system has ceased to work and you want the landlord to repair the problem. We encourage you to plant some relationship seeds now, as your bargaining power is much stronger with someone you know than it is with a stranger.
Q: Is it better to lease a location for my new business, buy a business condo or construct my own building?
A: This is an excellent question; by asking, you are already considering all the options. There are pros and cons to all three avenues. Leasing prime real estate may be affordable, while buying may not even be a financial possibility. However, it feels better paying down a mortgage (with ownership as a goal) rather than writing rent cheques forever. Leasing is more immediate, while building is more permanent. Mortgage payments are comparable to lease payments. Only a handful of our commercial clients hire us to help them buy a property, but that is mainly because leasing opportunities greatly outnumber purchase options.
We think that buying a condo or property is a great option provided you are not sacrificing your location, visibility or accessibility to do so.
Q: I have operated my business in the same location for many years – can I get my deposit back from the landlord?
A: Don’t assume your landlord will voluntarily or willingly repay or refund your deposit. While most do so, many landlords look for reasons to keep some or all of your deposit. Whether it’s repairs, cleaning, removing your leasehold improvements or such, the landlord may try to keep your deposit. Ask the landlord or property manager directly (before you vacate the space) if a walk-through is required, where you turn in your keys, how long you will have to wait for a refund and how much deposit the landlord has on account for you. Don’t be silent and don’t assume your deposit will come on its own – ask for it. The Lease Coach is frequently able to negotiate for the return of a deposit on lease renewals.
Q: I have heard that the landlord may be selling the building. My lease is going to expire soon – should I try to negotiate my lease renewal with the existing landlord or wait until the new landlord is in place?
A: Negotiate with the existing landlord. Any new landlord buying the property will probably do some cosmetic upgrades and say they have renovated the property and use that to justify a rental increase. If you have a lease renewal coming up and the landlord is thinking of selling the building, try to get your lease renewal done with the existing landlord rather than the new landlord.
Q: I simply dislike negotiating and I’m not very good at it. What should I do to avoid getting taken?
A: You know what? You are in the majority. Most commercial tenants feel inadequate when it comes to negotiating a lease deal – the difference is that you have admitted your weakness. We believe that there are many things you can do to avoid regrets. Use a professional lease consultant to either guide you through the process or negotiate the entire deal for you. Probably one of the most cost-effective (and certainly one of the easiest) things you can do to help yourself is to read our book, Negotiating Commercial Leases & Renewals For Dummies. •
Dale Willerton ([email protected]) and Jeff Grandfield are lease consultants for tenants, professional speakers and co-authors of Negotiating Commercial Leases & Renewals For Dummies.
