MANNING & MANNING Q&A - LAKE COUNTY BUSINESS JOURNAL
June, 2006
What's the best way to get out of a commercial lease that I no longer need?
The first step is to refer to your lease agreement. You may sublease if your agreement provides for it. Most agreements only allow this with landlord approval. Subleasing does not relieve the original tenant of obligation in the event the subtenant defaults.
Or you can buy out of the lease. This method requires the tenant to pay a negotiated lump sum to the landlord. This sum is calculated by discounting the future value of lease payments and then recapturing the unamortized portion of commissions paid as well as the value of tenant improvements. The buyout price is most often significantly less than the total of the remaining payments on the lease. Buyouts protect tenants by ending liability for the lease. For landlords, buyouts cover the sometimes significant vacancy costs during the time needed to find a new tenant.
Another approach is to see if your current landlord has space that meets your need. This will only require a modification of your current agreement.
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Francis P. Manning
Manning & Manning Co., L.P.A.
7556 Mentor Avenue
Mentor , Ohio 44060
(440)269-8823
(440)269-8819 - fax
Providing Legal and Business Counsel with an Emphasis on Commercial Transactions, Real Estate Development, Entity Formation and Structuring, General Corporate Matters, Estate and Business Succession Planning and Probate |
