In the case of this unsuspecting business owner, he should have looked over the assignment language before signing it and requested that at the end of the first extended term, he would be let out of his obligation. The landlord had to approve the new owner (assignee) and would not likely have approved them if they were not credit worthy or had the finances to fulfill the financial obligations of the lease.
What happened next was a total shock to the commercial lease tenant. The landlord wanted to exercise their right to cancel the lease and recapture the space due to very onerous and restrictive language in the lease contract.
‘Recapture’ means the landlord can take your business from you.
Ever wondered what to look for in a commercial lease? What should you look out for? What are good terms? And are you getting the short end of the stick?
When it comes time to your business lease expiring or starting a new business, business owners must objectively evaluate what is in their best interest when considering a move or new location. The size, price and physical location are paramount factors in determining what‘s best for your business.
Unlike residential real estate where you have consumer laws to protect the buyer or lessee in a transaction, commercial real estate does not exactly fall under the same jurisdiction.
In a noncommercial real estate transaction, the agent is required by law to have myriad disclosures signed by all parties, and strict disclosure laws must be followed. In commercial real estate transactions, especially leasing, there are no specific disclosure laws or paperwork required.