As I wait for the CDC Moratorium to lift, my focus has turned to small business landlord-tenant issues. It is clear to me that for small business owners hit with personal accelerated lease payments or large back rent judgments, the only option may be bankruptcy.
Due Diligence
Before settling on a location, hire an agent who can assist you in conducting due diligence regarding traffic, the history of other businesses at that location, demographics, product choice, etc. For retail businesses, location, location, location is key.
Read the Lease & Seek Counsel
I understand new business owners are excited about opening a new retail business. However, new owners shouldn't let that excitement cloud the need to review a lease with a fine tooth comb. Indeed, most retail owners open rent an empty space, commit to years of rent that total tens of thousands of dollars, and take out loans to modify that newly rented space. Sometimes, owners are so focused on construction and equipment, they forget to read the lease.
Prior to signing, hire a lawyer to review the document.
Does the document have CAM charges that will increase your monthly expenses?
Does the lease have income charges?
How are repairs allocated?
Who takes care of HVAC replacements?
What happens if the building is destroyed or damaged?
Can the tenant sublease if the business is in trouble?
Can you avoid having a personal guaranty?
Is there a lockout and seizure provision?
These are things an experienced landlord-tenant lawyer can review with you before you sign the lease.
Trouble After Opening
Sometimes, a dispute arises between the landlord and tenant for a myriad of reasons. If this happens, make sure everything is in writing to memorialize the discussion. If the parties cannot come to an agreement quickly, consult a lawyer. Getting a lawyer involved quickly may prevent headaches and costs in the future.
