The Month to Month Lease can be Problematic

By Hoke - Last updated: Thursday, July 22, 2010 - Save & Share - Leave a Comment

The value of a month to month lease depends upon the disposition of the Landlord. A Landlord who values a new long-term tenant will be pleased to issue a favorable new lease. An opportunistic Landlord may attempt to dramatically raise the rent or add tough conditions thereby reducing the sales value of the business and possibly killing the transaction. An important condition of escrow should be that the Business Buyer gets a New Lease.

From the Business Seller’s perspective, if the business being sold is profitable, a long term assignable lease can add value to the sale. Getting a new lease or lease extension before the business goes on the market is usually much easier prior to initiating the business sale than after escrow is opened and there is a third party Business Buyer involved. This is especially the case if the Landlord may decide to be opportunistic. Business Sellers who provide Business Seller Financing must either assign the existing Lease or Sublease if they would like to repossess the business in the event of default.

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Posted in Improving Business Desirablilty, Leases and Selling the Business, Preparing the Business for Sale • • Top Of Page