lease assignment?

ANGEM

Hi all can anyone explain the difference between a lease assignment and a lease or is there a difference ?

antoinolachtnai

A new lease is when there is only you and the landlord. The landlord is giving you the right to occupy the property and the obligation to pay rent. (This is a simplified version.)

With an assignment, you are taking over the rights and obligations lease from the existing tenant. In the jargon, the lease is being 'assigned' to you.

There are a lot of important things to consider with this situation, commercial and legal. If you really have no knowledge at all in this area, you should engage an agent of your own to advise you on the commercial aspects (as well as a solicitor to advise on the legal aspects).

ANGEM

Thank you Antoinolachtnai
we are looking at a cafe with a 3 year lease assignment we are planning to get a solicitor to check out agreement just a bit concerned its our first venture on our own and don't want to lose the little we have managed to save. Does that mean that we would be renting from current tenant or stepping into their shoes?

antoinolachtnai

You would be stepping into their shoes, basically.

A three year lease for a cafe property? I am veering into giving you commercial advice here, without knowing the circumstances, but this is probably not a good idea. The lease is just too short. You will not be able to invest in the property.

It is probably not what you want to hear, but you need a lot of advice, if you don't have the background yourself.

ANGEM

Antoinolachtnai
your right its not what i want to hear but i need to hear it so thank you. At the minute all we have done is expressed our interest I supose the next step would be to get a copy of the lease and get it checked by a solicitor? As much as we want to open our own place we want to do it right so all advice is most welcome

antoinolachtnai

ANGEM wrote: »

Antoinolachtnai
your right its not what i want to hear but i need to hear it so thank you. At the minute all we have done is expressed our interest I supose the next step would be to get a copy of the lease and get it checked by a solicitor? As much as we want to open our own place we want to do it right so all advice is most welcome

Really that is not the next step. The solicitor will give legal advice. Legal advice is unlikely to be a big deal for a three year lease.

You have to consider first whether you can make any money at this, at the current rent. Coffee shops are closing all over the place. Is the rent justified? Is it worth bothering with developing a site that you could be kicked out of in 30 months. Can you negotiate a better deal with the landlord? Is the seller distressed?

I am concerned that you are blinded by your desire to start something. You need proper real estate and commercial advice if you don't have the knowledge yourself.

ANGEM

God this is getting confusing I thought a solicitor would be the right person to advise us about the lease who is the right person?
The owner does'nt look stressed i think he's well over staffed.
I've visited a few times at different times and days and while its not packed their are always customers but the whole place needs a good cleaning their hyigene leaves a lot to be desired which would'nt help business

antoinolachtnai

You will need the solicitor but the solicitor will give legal advice not business advice.

Do you know anybody who owns/runs a cafe?

Do you have a business plan? Do you know what turnover you need?

Have you spoken to the various property agents to find out what else is available for the price, in the area?

You need to find out a lot of things. If you haven't done this before you need to get some help.

A.

ANGEM

I ve worked as a chef for 20years so I know the business I know I can make money in this cafe I think the current owner is having problems because he's not local or irish (sad but true racism is alive and well) while Im not local I have freinds who live in the area and would be well known.
I'm meeting an old boss during the week to talk some things through I ran his place for him when he got fed up it will take hard work but thats not a problem the problem is sorting out the lease side of things I've never done any of this before

antoinolachtnai

Sounds good.

One issue you're going to face is that the lease is not long enough. But if you are a credible operator the landlord might sort something out for you.

ANGEM

thanks for your advice much as i want this place if it does'nt work out then its not meant to be and theres somewhere better waiting.
Will meet with the estate agent and see what he has to say take it from there.
I hope you don't mind if I come back asking some more questions your answers are appreciatated.

antoinolachtnai

be sure to talk to other agents apart from the one you are now looking at - ask them if they have properties that might be suitable. You'd be amazed, a lot of stuff could be available at the moment, without actually being on the market. However, don't expect the agents to pour their hearts out to you the first time you talk to them!

See if you can put some numbers to your assessment of the current business. Try to work out the number of covers and the average spend, for instance.

ANGEM

this is one of 3 places were looking at it seems to be the best out of them and for the location the rent and rates are very reasonable.
I will be asking to see books when I meet the agent and also to get in and have a proper look in kitchen check out the equipment I would also like to talk to the current owner. I'm not willing to be rushed don't want to make any mistakes

antoinolachtnai

books - you don't necessarily get to see the books, and you would really be better to go by what you count with your own eyes rather than looking at the books. You are (I am guessing) talking about buying the lease, not the business itself. Books can really be a work of fiction. I would not bother meeting the current owner until very late in the process, but talk to your ex-employer about the best approach. Kitchen equipment - does it really matter that much? The agent should be able to tell you what's there.

ANGEM

the owner is selling the equipment he owns most of it. agent is looking for a deposit and references. Freind knows a girl who works saturdays for them and she didnt know he was selling
I have sat in cafe and had coffee for an hour or so at different times had freinds go in and see whats happening and it does seem busy also know that the owners not there that long don't know why hes selling previos owner was there for years.

antoinolachtnai

Sounds good, but try to put a number on it! How many covers, average purchase, how many people walk by.