Question
New York Commercial Lease - Can I opt out?
Hello guys. I have a question arising from a very difficult personal situation. I have a store and I entered the lease on 1993, and still present till this day. The rent is getting too burdensome to pay because the business itself is not doing well. I did ask the landlord if he can lower some rent and i don't think he'll lower it enough for me to be able to pay. I am wondering if I have any leverage in negotiating for a lower rent. I have a link to a copy of the contract that I have, with names crossed out. It does not have an early termination clause, but I don't have the expertise in contracts and common laws to see what my situation is if I decide to opt out of the lease and close down the store. The lease as it stands is due to expire on 2017, and there is no way for me to be able to continue this business until then with this rent. An issue that I would like some clarification is the original lease was signed with my name as a party to the lease, and not the store, which is set up as a corporation. I am assuming that I will be held personally liable even though the store operates as a corporation. However, I hope to get a confirmation as to this matter and hopefully I will have some kind of leverage to lower the rent. Thank you for all of your help. www ...
4 weeks ago - 2 answers
Best Answer
Chosen by Asker
You are correct that you are personally on the hook for the remainder of the lease term. As the other answer mentioned, subleasing or assignment is an option if you can find another person willing to take on your existing lease terms. Since you just signed a 10-year lease renewal in 2008, you have nothing with which to tempt your landlord to reduce your rent EXCEPT being in the space. Talk to the landlord and tell him that you are about to go under and you must have at least $_____ of rent reduction in order to keep your business afloat. Argue that at your current rental rate you are paying above market without the landlord having been required to pay your construction costs or broker commissions to get the deal done. (I am assuming you did not have a broker since I saw your lease - yikes!) You are a triple-net tenant carrying all of the operating costs for the physical premises, so apart from income tax and debt service your space has NO expenses to your landlord. Basically, all you can do is threaten to bail, because that is the only leverage you have. (Just in case you get to the point where you do have to default on your lease, you might want to consider taking steps to protect what personal assets you can NOW before things go completely bad.)
by MC Wife
3 weeks ago
Asker's Rating: 
Other Answers
You will be held personally responsible for the lease. Consider trying to sell the business or sub-leasing the premises. In commercial leases the landlord cannot unreasonably withhold their approval to a new sub-leasee or new owner. If you just close the business and abandon the premises you will be responsible for the rent until another tenant is found. Also if the landlord ends up having to rent the premises at a lesser rent you would be responsible for that difference until 2017. Also you would be responsible for any clean-up, repairs, or removing any of the modification to the build that you might have done over the years. Most business owners in your situation end up having to declare bankruptcy to escape these heavy and expensive consequence.
by Glenn S- 4 weeks ago