Question

Can Commercial property owner who also sold you the business kick you out?

Scenario is this, commercial property owner who also owns the business sold you the business for $ 150,000 with 5 year lease. After 5 years, after lease is up, can property owner refuse to re-new the lease and kick you out?

If so, can you get part of $ 150,000 paid to purchase the business? If the commercial property refuses to renew the lease, that seems like the person who purchased the business has been taken to cleaner... I mean, commercial property / business owner is going to get paid $ 150,000 plus all the rent from 5 years, and gets to take the business back. Is there some kind of protection for the person purchasing the business?
But Neil, in case where business is a restaurant? How would that work? Even if all the equipments are taken out, it would not be worth say the cost of the initial business purchase fee.
We have entered into negotiation for restaurant, but we are a bit nervous about the deal because the owner of the restaurant also is the owner of the building. We want to make sure we are not walking into a trap. Lawyer will definitely need to be part of the process!

5 months ago - 5 answers

Best Answer

Chosen by Asker

Yes, but your use of the term Kick Out is not accurate. I know what you mean, but a lease has a term, and if that is 5 years it is five years. This is why it is good to get outside professional advice. Anyone buying a business with fixed assets like a restaurant would not sign an agreement with out options, say 5 years with renewal options every 3, 4 or 5 years. With total lease options of say at least 10 years.
If the business is doing well the owner can exercise the option and renew for X years. If going bad can, close, sell business, renegotiate with landlord for different rates,terms, etc.
And you are right the deal you described would be a bad idea for the purchaser. Hoping the landlord will renew is a bad position to be in. Also with no options the landlord can sell the building to someone who wants the space.
If what you describe happened to someone they need to seek legal advice. And if they made a mistake, since they own the business equipment, if the landlord will not deal, then strip the place down to the bare walls by taking every piece of equipment out. Depends on if the lease identified "Fixtures". So this would mean the landlord can not walk into a turn key business and will have to go out and spend a lot of time and money to get equipment back in.
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5 months ago

Other Answers

Yes unless the lease was say, 5+5. You're only allowed in the premises while a lease is current.

The lease would not be in the price of the purchase. The previous owner does not take the business back - you just move it to other suitable premises.

by Neil - 5 months ago

Yes, the Landlord can terminate the lease. This has nothing to do with the business that was sold/acquired. Review the lease terms. Business owner should have negotiated better terms.

by Barkley - 5 months ago

It really depends on the lease agreement that you originally signed with the original owner. I would imagine if he still has a note on the business he sold to you it gives him very little motivation to "kick you out". I would try and renegotiate and get some "options" of future rent consideration built into a new revised lease. In this marketplace landlords (especially former business owners) can be somewhat flexible in new lease terms.

by Peter - 5 months ago

Yeah it may be, probably try to sign all the required documents with proper accord and rules .taking expert property advice is best.

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by Paul - 5 months ago