When it comes to buying or selling a business do not overlook leases. The location of your business and how long you can stay at that location plays a key role in the overall health of your business. In terms of stability, few factors rank as high as that of a lease. Here are some key facts to keep in mind about leases.
The Different Kinds Of Leases
There are three different kinds of leases: the sub-lease, the new lease and the assignment of the lease. These leases differ from one another, and each impact a business in a different way.
A sub-lease is a lease within a lease. In this type of lease another party holds the original lease. In this situation, the seller is the landlord. Sub-leasing generally requires permission by the original landlord. A new lease is when a lease has expired and the buyer must obtain a new lease from the landlord. Buyers should be certain that they have a lease in place before buying a new business. If you don’t, you may have to relocate the business if the landlord refuses to offer a new lease.
The assignment of lease is the most common type of lease when it comes to selling a business. Under this type of lease, the buyer is granted the use of the location where the business is currently operating. The seller assigns the buyer the rights of the lease. The seller does not act as the landlord in this situation.
Understand All Lease Issues To Avoid Surprises
Buyers should understand all aspects of a business’s lease early in the buying process. No one wants an unwelcome surprise when buying a business.
Don’t ignore the critical importance of a business’s leasing situation. Whether buying or selling a business, it is in your best interest to clearly understand your lease situation. Both buyers and sellers want stable leases with clearly defined rules. Sellers can use a stable leasing agreement as a strong sales tool.