question about getting a lease lawyer

the business of coffee houses

question about getting a lease lawyer

Postby Jimmy Oneschuk on Mon Jan 22, 2007 4:17 pm

This is a newb question to all those who have traveled this route before.

How do you recommend going about getting legal counsel for signing a lease for a space? Is it possible to DIY, if you're read up on basic lease agreements, or is there benefit of having a lawyer to do this, in case something goes wrong later on (sorta like insurance, no?).

thoughts?

PS: I have read the excellent Qs on Leasing thread... but I guess I'm looking for feedback on soliciting a lawyer...
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Postby onocoffee on Mon Jan 22, 2007 4:27 pm

I think it helps to have a variety of approaches. Your previous experience, the feedback of your lawyer (who should have specialization in commercial leases) and trusted advisors/mentors (presuming they have previous lease negotiation experiences).

When I started in the Leasing Jungle, I was wholly unprepared for what was to come. Management companies do this on a daily basis and they can eat you alive. So what if your business may fail because of a usurious lease? That's of little concern to them From what I've seen, there is no such thing as a "standard" lease or a "boilerplate" lease. Everything is up to negotiation.

In reality (at least my reality), you won't hammer on everything. You need to pick and choose which clauses you're gonna fight over. It's a give and take - though it usually feels like you have to give and give and give - and then your butt is sore from the reaming.

Figure out what's acceptable to you in terms of price per square foot and the escalation you can live with. Do you see NNN or Triple Net on the lease? Then buyer beware! Not that those are uncommon, just that you'll have additional expenses like maintenance and taxes to pay.

Whatever you do, take your time. Don't be in a rush. And don't "be in love" with the space. Any of these things put you at an automatic disadvantage - and remember: you don't have experience negotiating a lease so you're already at a disadvantage! Don't make it harder on yourself.

Good luck and hope you find a great location and a great deal.
Jay Caragay

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Postby Ryan Mason on Wed Jan 24, 2007 6:42 am

I found my attorney through a referral. Turned out, she worked in the same office as another attorney that was recognized in the area for his expertise in lease negotiations. I admit, I was very fortunate to have found her. She was a few years out of law school, not yet charging massive hourly rates. But she did consult with the attorney in her office to help create a very strong lease with very some very specific information. It turned out to be invaluable, considering the building I occupy was recently sold. Leases go with the building some I'm protected.

My suggestion is talk to some of your regulars most likely some are lawyers that can do the work you need or can refer you to someone who can. That's the way I've gone about getting a lot of things done at my cafétalk to the people you serve.

I would not suggest DIY It's hard because you're using 'today's dollars' to protect 'tomorrow dollars.' In other words, you may not see the direct impact of the money you spent until something unforeseen happens. That's when the lease becomes an asset that can save you tons of money.
Ryan Mason
Roast Coffee Company
Milwaukee, WI
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Postby Jimmy Oneschuk on Wed Jan 24, 2007 11:55 am

Ryan and Jay, I sincerely appreciate your feedback.


It's kind of a funny situation... the lease will contain 7-12 months of free rent, and I'm in the situation that the success of this coffeebar will directly impact the image of their institution. However, they're planning on vacating their building for 18 months for a different location, while their entire complex gets renovated... and it is unknown how soon this will happen... 1 year, 3 years or 5 years into the future. For this reason alone, I'd likely need a provision in the contract to provide some security for the business in case installation in a temporary location causes financial disaster.

On a side note, a benefit of this space is the furniture is provided (modern classic!) and a kitchen is already built (sans hand sink or dishwasher), but a bar in the restaurant space would need to be installed, with plumbing and electrical... Bathrooms are already built. And lastly, a drawback is the kitchen would maintain some shared use with the buildings other staff.

I unfortunately don't have the ability to talk with customers too much on this issue. Perhaps a logical place to begin is with my local chamber of commerce. One of my chef friends mentioned when he signed his lease, he took the existing lease to a real estate group (a friend of his) and had them analyze it for things, like Jay mentioned, triple net, etc...

cheers,
jimmy
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Postby onocoffee on Wed Jan 24, 2007 12:42 pm

Jimmy-

7 to 12 months with no rent??? Man, and I thought I had a good deal...

If it were me, I would press them a little more to see exactly how far out they are from the 18 month renovation. Six months may be just enough to build up a war chest to ride out any problems or at least figure out if the location is worth the trouble and if you end up closing, you won't have lost as much as you could have.

What is their plan re: your coffee operation when they move to the temporary facility? Will you be going with them? Will they cover the build out cost in the temporary space?

Then when you return: will they work with you on the renovation and potential redesign of your space? Perhaps you can get them to cover the costs?

Just remember to take your time and ask for as much feedback and advice as you can, but remember that in the end, it's only you who has to live with your decisions. Depending on the amount of rent you'll have to pay, it could be a very positive experience.
Jay Caragay

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Postby Jimmy Oneschuk on Sun Jan 28, 2007 9:27 pm

Jay, thanks for your feedback once more; truly invaluable stuff.

I have a meeting with them again this week to figure out some terms we both want to see, then get the lawyers to look at them. At the meeting last week, we decided the term will definitely end before they plan to move, do I'd have to reassess then.

We're planning on meeting next week to determine what we both want to see, then after figuring this out, take this info to our lawyers to get a contract worked out.
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