So You're Marrying the Landlord ?
-Restaurateur
Wannabe: “Starry-Eyed”
-Lusty Landlord: “Lusty”
The
Ceremony:
J P to Starry-Eyed: Do you take Lusty Landlord to be your lawful husband? Do you promise to pay him rent in good economic times and bad, when the restaurant is busy or slow, when you are well or sick, for the entire term of the lease? Do you promise to obey him and comply with every clause in the lease whether simple or convoluted, reasonable or outrageous, as long as you are together and even afterwards, should the restaurant not be successful?
Starry-Eyed: Well, since I love the location so much and I’m certain the restaurant will be a resounding success, I will.
Guest (calling out): Hold it, Your Honor! Before you join Lusty Landlord and Starry-Eyed Wannabe, there are serious issues I know about that might prevent this marriage from taking place.
J P: What serious issues are you talking about?
Guest: Well, I’d like to ask Lusty Landlord a few questions. Mr. Lusty, is there a mortgage on this property?
Lusty: Yes, there is.
Guest: Wannabe, did you know that?
Wannabe: Why do I need to know that?
Guest: Because it could end up voiding your lease. Lusty Landlord, if there’s ever a foreclosure on the property, will Starry-Eyed’s lease remain in effect or will it be forfeited?
Lusty: Well, I’m not sure but I think it will be OK.
Guest: And, is there a major tenant on the property doing lots of business?
Lusty: Certainly! That’s why this is such a good spot. They draw lots of traffic that will benefit Starry-Eyed’s restaurant.
Guest: If that major tenant goes out of business, will Starry Eyed have the option to cancel the lease since that may seriously impact the restaurant?
Lusty: No, that’s not one of the provisions of the lease.
Starry-Eyed: I didn’t realize that clause should be in the lease!
Guest: Well, these are only two serious issues among many to consider.Your Honor, I suggest there’s enough lack of understanding between Lusty and Starry-Eyed to delay this marriage until all the facts are fully disclosed and completely understood.
J P: I agree. Starry-Eyed you must get solid legal and business advice before I can permit you to marry Lusty Landlord. Otherwise it may be a union with holes instead of wholesome! __________
Wannabe restaurant operator, a restaurant lease can be a very complicated legal document that can trip you up and even cause you to lose your restaurant.
1. NEVER SIGN A LEASE PERSONALLY OR PERSONALLY GUARANTEE THE LEASE PAYMENTS!
2. NEVER SIGN A LEASE THAT INCLUDES A
PERCENTAGE OF YOUR RESTAURANT SALES AS PART OF YOUR RENT. YOUR SUCCESS IS BASED
ON THE SUCCESS YOU EARN IN OPERATING THE RESTAURANT. THE LANDLORD IS NOT YOUR PARTNER
WORKING DAY TO DAY WITH YOU IN THE RESTAURANT!
If you sign personally and the business isn’t successful, you’ll be on the hook personally to make those payments. That could devastate you financially or embroil you in an expensive legal battle. Better to let your corporation or other, separate, legal entity sign the lease. If the potential landlord won’t lease to you under those circumstances, find another location. Why should the landlord benefit if you lose? And why should the landlord get more rent if you achieve success.
Please
note: This author is not an attorney and
this is certainly not intended to be legal advice. I strongly recommend you
consult a highly-qualified, experienced, real estate attorney before you ever
sign a lease. Otherwise you might even lose your home, other assets, or be
forced into personal bankruptcy.
“A
divorce suit always costs more than a marriage gown.” --Author Unknown
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