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Stories From Reality Business Broker World - Landlord Issues


As a business broker, one of the most difficult parts of my job is dealing with landlords. Orange County is synonymous for unscrupulous landlords, and complicated, one sided leases.  There's a general rule of thumb that the bigger the lease the more difficult the landlord, most of the time that is the case indeed. However, I just closed a deal that defied my theory. I had a listing for a business that had a modest retail front but was mostly wholesale. The location is way off the main streets in an industrial area so it would not be considered a prime location. The business was 20+ years old and had only changed hands once before this transaction; I mention that because landlords can get burned out by constantly having to release the same local over and over. When I took the listing I asked for copy of the lease and was so happy to see 2 little pages, I thought, "oh goodie".

I advertised the business on BizBen and found a buyer quickly, we went into escrow. The seller told me the landlord was an older guy and a little particular so it would be a good idea if he told him he was selling and then set the meeting to introduce the buyer in person. That meeting happened without too much incident. The buyer explained to the landlord that he needed more time on the lease because he was getting a SBA loan. There was a bit less than 3 years left on the current lease so initially we asked for 2 options of 3 years and 4 years. As the deal progressed it came time to get the assignment signed and the options taken care of. That's when I got involved and had to speak to the landlord for the first time.

To say this man was cantankerous would be an understatement, he spent 25 minutes telling me what a huge waste of his time this was and how everyone involved was incompetent. He was combative on everything I said and it was obvious he was going to be a pill to deal with. Then, as Murphy's law would have it, the bank asked for a 3 year + 4 year option but that wouldn't cover the whole term of the loan, which is usually 10 years, they were a whopping 4 months shy. Normally that wouldn't be a big deal, as a matter of fact, if I had a property in an offbeat location and I had a tenant who wanted more options I would be thrilled to give it to him. This guy was not thrilled, he was bitter to his core and the most negative person I ever spoke to. We were end the end of the SBA loan process and 2 days from closing and the only thing holding us up was this guy. All we needed was 4 months added on to end of 9.8 years and he wouldn't do it. I pleaded with him to not take his anger out on the tenants, they didn't do anything, and he refused. The whole loan had to be rewritten to accommodate the new term of 9.8 years and it delayed the closing by another week.

I have dealt with a lot of landlords and they are very predictable, if it benefits them then that's what you can expect but I never had a situation like this. There was no benefit to behaving this way and I'm happy the buyer wasn't frightened away by this guy's nasty behavior. The good news is that the buyer got a great business that he's very happy with and will make a great living with and the seller sold his business for a good and fair price. So the moral of the story is that you can't assume that you're going to have an easy ride with a landlord that issues a 2 page lease. You must always be professional, courteous and on top of the assignment details no matter who the landlord is.

About The Author:  Christina Lazuric is an Orange County Business Broker who shares her broker experiences with BizBen readers and has had varied direct small business experience in the past but now assists small business owners sell their business and offers business buyers find their dream business to operate. Phone Christina direct at 949-257-7823.

Categories: BizBen Blog Contributor, Business Broker Information, Buying A Business, Deal And Escrow Issues







  Helpful Resources To Assist In Selling And Buying California Businesses
Shalonda Chappel-Pilgram: Escrow & Bulk Sale Services - Southern California

Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Helen Yoo, New Century Escrow - Escrow Services In Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

Steve Zimmerman: Restaurant Broker Specialist, California

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 900 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker - An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.

Jack Oh, Business Broker: LA, Orange Counties

Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989.

Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence

I have 32 years experience in the laundry industry, specializing in assisting laundry buyers with buying or starting up, building, re-tooling, laundries in Southern CA. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations. Call 619-227-5711 (Cell).


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