Legal Blog

M & A Nuggets: Lease Matters

If you are purchasing a business and the seller is a tenant under a real estate lease, there are several matters to be dealt with well before closing.  Landlords often take some time to react to requests to approve lease transfers.  If you intend to continue using the seller’s leased premises, it is therefore important that the landlord be contacted by the seller promptly after the purchase agreement is signed.  Early on, you should request the lease from the seller and review it to determine what, if any, changes you will request.  As a result of your review, you may determine to just request an assignment, or transfer of the lease, or to request an entirely new lease.  Leases often contain provisions requiring the seller to pay a transfer fee to the landlord on assignment.  The purchase agreement with your seller should make clear that the seller is required to pay that fee.  Security deposits are an item that should be dealt with in the purchase agreement.  Prior to the purchase price being finalized, you should decide whether the security deposit will be included in the assets acquired or whether the seller will receive a return of the security deposit from the landlord, requiring you to post the security deposit.

By staying on top of the lease component of the acquisition and making sure that the seller does the same, you can avoid a common problem of the closing being delayed while waiting for the landlord’s approval.



Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress.









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