Commercial Leases (Business Transactions context)
Commercial leases appear in two different contexts in a transactional practice, and both matter. The first — covered separately under the Contracts section of this site — is a business owner negotiating a lease directly with a landlord. The second context, addressed here, is what happens to a commercial lease when a business is being bought or sold.
In many business transactions, the lease is one of the most valuable assets being transferred. A restaurant, retail location, medical practice, or service business that has operated from the same location for years may have a lease with favorable terms — below-market rent, a long remaining term, renewal options — that represents real economic value. Whether that lease can be assigned to a buyer, and under what conditions, is a question that must be answered early in the transaction. Most commercial leases require landlord consent for assignment. Some landlords will consent readily. Others will use the transfer as an opportunity to renegotiate terms, demand a personal guarantee from the new owner, or in some cases, refuse consent entirely.
The handling of the lease is often one of the most sensitive and time-consuming parts of a business sale. It requires careful coordination between the purchase agreement, the assignment and assumption documents, and the landlord’s requirements. The timeline matters too — landlord approval processes can take longer than anticipated, and a deal that is otherwise ready to close can stall waiting on a lease assignment. Understanding the lease assignment provisions before the letter of intent is signed, not after, allows both buyer and seller to plan accordingly. A transactional attorney who handles business sales regularly knows to put the lease question on the table early.
Related FAQs
What should I look for before signing a commercial lease?
Key areas to review include personal guarantee clauses, rent escalation provisions, common area maintenance (CAM) charges, assignment restrictions, renewal options, and what happens if the business closes or needs to relocate. Commercial leases in Florida are largely unregulated and are drafted to protect the landlord — review before signing, not after.
What is the difference between an asset sale and a stock sale?
In an asset sale, the buyer purchases specific identified assets of the business rather than the entity itself. In a stock or membership interest sale, the buyer acquires ownership of the business entity, including its history and liabilities. Each structure has different implications for both the buyer and the seller, and the right choice depends on the specifics of the deal.
Do I need an attorney if I am using a business broker?
You don’t need one, but it is recommended. A business broker helps identify buyers or sellers and facilitates the transaction. An attorney reviews and drafts the legal documents that govern the deal — the letter of intent, the purchase agreement, the closing documents, and any ancillary agreements. These are different and complementary roles.
What is a personal guarantee and should I be concerned about signing one?
A personal guarantee makes you individually responsible for a business obligation if the business cannot fulfill it. It bridges the gap between business liability and personal liability. You should understand exactly what you are guaranteeing — and whether the terms are negotiable — before you sign.
What is the difference between a transactional attorney and a litigator?
A transactional attorney focuses on preventing legal problems — drafting contracts, structuring deals, and building the legal infrastructure that keeps a business running soundly. A litigator handles disputes once they have reached the courts.
How do I know if my question falls within this firm’s practice area?
If your question involves a contract, a business structure, a transaction, or the day-to-day legal needs of running a business, there is a good chance it does. If it involves a lawsuit, an employment dispute, a criminal matter, or a real estate closing, it likely falls outside this firm’s scope. When in doubt, reach out; a brief conversation will clarify quickly.