Negotiating a Commercial Lease Buyout

A commercial lease buyout is a relatively simple transaction and can be pretty easy to understand.  The general definition of a commercial lease buyout is when a tenant pays the landlord who owns the commercial property a very large sum of money to end a lease before it officially expires according to a lease contract.  Read on to learn about negotiating a commercial lease buyout.

What Is a Commercial Lease Buyout?

A buyout of a lease is sometimes a part of an original leasing contract, and at other times, it is something that is agreed upon by tenants later in the process. 

How Can I Negotiate a Buyout That Benefits Both Parties?

You can figure out what each person wants in the deal, and try to cater to the landlord.  Obviously, buyouts are not something that a layout is bound to agree to, and even if the landlord gets a sum of money before the lease expires, they will usually lose money by accepting a buyout.

Despite all of this, depending on what each party wants to accomplish during the transaction, a lease buyout can be a fairly simple process. Some buyout options are written into original leases, while others are agreed upon later by tenants and landlords. 
Understanding the process of lease buyouts is fairly simple.

Such an agreement will effectively make your lease void from the point of termination.  If you are having trouble making payments or are relocating your business, you will have to consider negotiating this agreement so that you get to keep some of your money and evacuate while pleasing your landlord.

Tips and Tricks for Negotiating

• You should know that you will usually pay about 50 to 60 percent of the balance that is left on the leasing document.  The tenant and landlord usually go back and forth with counter offers until they come to an agreement.  This agreement of meeting halfway usually keeps the case from going to the court system, and this can be even more expensive. 
• Consider the market conditions when setting up a buyout negotiation.  Your hope should be that the tenant and landlord are able to win in the situation, keeping costs low and maintaining a positive relationship between tenant and landlord. 
• If the market is in a bad position, the costs can rise unexpectedly, making it impossible to profit from the situation and in turn making the process unnecessarily stressful for both parties.  If you are a tenant, consider the possibility that your business can fulfill the terms stated on the commercial lease before trying to break your lease.

Getting Help

If you are interested in negotiating a commercial lease buyout, consult with an experienced real estate attorney who can provide you with help and guidance throughout the negotiation process.