Entrepreneurship & Small Business

"First time business buyer", commercial lease takeover

  • Last Updated:
  • Oct 22nd, 2016 9:06 am
[OP]
Member
Dec 13, 2008
211 posts
26 upvotes

"First time business buyer", commercial lease takeover

Hello all. I am well versed in residential transactions but we are now planning on purchasing an existing private business with a commercial lease takeover.

I have no idea where to start. I know I will have to do my due diligence with checking statements, the original lease contract, and misc financials.

Is there any advice for a "first time buyer" in the commercial world? What is the process of the transaction? what needs to be done on the legal side? Is there any formal way to present my offer to purchase or no formal way since it is a private sale?
4 replies
Member
Dec 23, 2007
326 posts
50 upvotes
Hamilton
Make sure you have a lawyer to look at the contract/purchase agreement. I have had a nightmare scenario with RioCan with a lease takeover and I wouldn't wish that experience on anyone.
Deal Addict
Mar 16, 2006
2315 posts
769 upvotes
flaygrant wrote:
Oct 19th, 2016 11:18 am
Hello all. I am well versed in residential transactions but we are now planning on purchasing an existing private business with a commercial lease takeover.

I have no idea where to start. I know I will have to do my due diligence with checking statements, the original lease contract, and misc financials.

Is there any advice for a "first time buyer" in the commercial world? What is the process of the transaction? what needs to be done on the legal side? Is there any formal way to present my offer to purchase or no formal way since it is a private sale?
Private sale is tricky. To start, your offer of purchase should be contingent on checking their sales figures and on landlord allowing lease take over without any changes to the lease.

Business transaction is 10 times more complicated than residential so be careful and make sure to have your accountant and lawyer look at everything.
[OP]
Member
Dec 13, 2008
211 posts
26 upvotes
flying triangle wrote:
Oct 20th, 2016 5:28 pm
Make sure you have a lawyer to look at the contract/purchase agreement. I have had a nightmare scenario with RioCan with a lease takeover and I wouldn't wish that experience on anyone.
What was your experience? So that I know what to avoid for my first time
Member
Dec 23, 2007
326 posts
50 upvotes
Hamilton
flaygrant wrote:
Oct 21st, 2016 4:32 pm
flying triangle wrote:
Oct 20th, 2016 5:28 pm
Make sure you have a lawyer to look at the contract/purchase agreement. I have had a nightmare scenario with RioCan with a lease takeover and I wouldn't wish that experience on anyone.
What was your experience? So that I know what to avoid for my first time
Before going forward make sure that the the property managers will release the current tenant and at what cost. In my situation, RioCan wanted a $25,000 security deposit that almost broke the deal as I wouldn't get this money back 'til the end of the lease which is 6.5 years. I finally agreed to this and decided to go forward and as we were completing the deal my lawyer told me they wanted another $35,000 deposit for 1 year and they would return it at the end of the year on a monthly basis for 6 months. This really soured the deal as I wasn't prepared to put up an extra 60k to take over the lease.

Just make sure you have the details of the lease ironed out before going forward. Get it all in writing from the landlord before making your move as your lawyer fees will start to add up if you don't.

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