should I assign lease or write a new one.

A business is selling to new owner. Old owner holding notes.
Should I do an assignment thereby keeping old tenant invoilved> What happens once the notes are paid off? Is the old owner still bound by the lease, or would there be verbiage that once he notifies us, we would exclude him and re-write balance of term. It seems to me that it is an added layer of protection for me in case the new owner defaults.
In Leasing Property - Asked by doug s. - Mar 29, 2011
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Answer(s)

Rob B.
Chandler, AZ

Doug....
You are thinking correctly. There is a general rule I follow on behalf of my clients that is as follows: "Keep all people accountable and responsible in a lease assignment". At times, you cannot get the Assignor to agree to stay on. In this case, you must make sure you have a credit worthy assignee, that is signing or guaranteeing personally. You must also be certain that you have some meaningful asset to go after if the person who is the guarantor defaults on his or her responsibility.
With regard to release clause language that will address your question about what happens once the notes are paid, consult with your attorney and he or she will be able to provide this for you. Onward and upward Doug...... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Mar 29, 2011
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Rob B.
Chandler, AZ

Doug...
You are thinking correctly. There is a general rule I follow on behalf of my clients that is as follows: "Keep all people accountable and responsible in a lease assignment". At times, you cannot get the Assignor to agree to stay on. In this case, you must make sure you have a credit worthy assignee, that is signing or guaranteeing personally. You must also be certain that you have some meaningful asset to go after if the person who is the guarantor defaults on his or her responsibility.
With regard to release clause language that will address your question about what happens once the notes are paid, consult with your attorney and he or she will be able to provide this for you. Onward and upward Doug.... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Mar 30, 2011
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C.K. L.
Broker/Agent
Pinellas Park, FL

Sounds like a situation where you should seek legal advise. However, some things to note are: If a tenant/owner assigns a lease, he will likely need the landlord's approval. There may also be a provision in the lease that provides whether or not the landlord agrees to release the prior tenant/owner from his obligations. If the landlord will not release the prior tenant, the lease will be assigned from them to you. If you sign a promissory note with the prior business owner, so long as it is not secured, it should not interfere with the lease provisions. Once you pay off the note, you should receive a satisfaction of the note from the prior owner. Paying off the obligation on the note has nothing to do with the prior owners obligations under the lease. When you take assignment to a lease, you should form a separate corporation/entity to ensure there is no other business relationship between you and the prior owner. You should make sure there is an indemnity provision in the assignment document wherein you are not responsible for any claims, damages, liabilities etc. of the prior owner. Recommend you seek legal advise to protect your interest.

Mar 31, 2011
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Bruce F.
Broker/Agent
White Plains, NY

The first thing you need to do is to look at the terms of the lease you are considering assigning. Is the tenant permitted to assign the lease and, if so, under what conditions and terms?
An assignment DOES NOT keep the old tenant involved. In fact, just the opposite ... an assignment, once executed, releases the old tenant from any responsibility it had under the lease. What keeps a former tenant involved is a sublet, not an assignment. These terms are used interchangeably, but are quite different and legally distinct.

Apr 6, 2011
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Chris R.
Broker/Agent
Denton, TX

Certainly you need legal counsel involved. You both need to review the existing lease and see what provisions it may - or - may not contain that a new lease might be able to correct. The old tenant likely will not want to remain on the hook and an assignment would not protect that anyway - depending on how the assignment is done - which - gets back to - you need legal counsel. If you are an agent - and you attempt to do that - you are practicing law. If you are an owner / investor - you need counsel.

Apr 7, 2011
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