Imagine you pay a restaurant owner $50,000 to buy his business. He hands you an agreement and you both sign it to memorialize the business transaction. He then hands you the keys to the business. Thirty days later you receive an eviction notice. You then try to contact the person with whom you had made the deal only to learn that the person has skipped town! The eviction notice you received was from the true legal owner of the business you thought you had bought. The individual you dealt with was the tenant who was already ninety days behind on his rent ($15,000). You have a choice to either pay the $15,000 in arrears to the true owner to avoid eviction or you don’t pay it and lose out on the business and the $50,000 investment.
The lesson here is to never have this happen to you. Never agree to sublease or take over a lease without prior Landlord approval and a copy of the Lease to Verify that the person transferring the lease to you truly has the right to do so. You should also verify that the Landlord has approved the sublease agreement.
Subleasing, leasing, transferring or buying an entire business in operation are very common transactions. The above example is unfortunately also a common scenario, but one that you can avoid. If you are considering one of these transactions be sure to have professional representation.
Call Golden Rule Resources for a free consultation!