leasing a building

Author Message
donecookn
  • Total Posts : 16
  • Reward points : 0
  • Joined: 8/27/2003
  • Location: no where, NJ
leasing a building - Wed, 06/29/05 12:27 AM
0
I know I should see a attorney but here goes. I have the option of leasing a building that had a restaurant in it. That restaurant closed but I am told it (the previous business)has liens on it from unpaid taxes. IF and I say IF I decide to lease the building will I have to pay the liens against the other business? The person who owns the building did NOT own the business.

The Travelin Man
  • Total Posts : 3698
  • Reward points : 0
  • Joined: 3/25/2003
  • Location: Central FL
RE: leasing a building - Wed, 06/29/05 12:36 AM
0
Yes, you should see an attorney if you are planning on entering into this contract -- mostly to make sure that what you believe to be true is, in fact, true.

If everything you say is correct, there is no reason to believe that you should be responsible for the lein against the previous business. The beef that the leinholder (the city/state government?) has is with the former owner (individual or corporation) that leased the building. If the owner of the building has paid all of his/her taxes, then the building, itself, should be safe to lease.

You should seek a professional opinion -- someone who knows the ins and outs of the local laws, as well.

Steve

festivalfood
  • Total Posts : 168
  • Reward points : 0
  • Joined: 9/18/2004
  • Location: peckville, PA
RE: leasing a building - Fri, 07/1/05 9:11 PM
0
I totally agree with Steve.Although they don't come cheap, an attorney in a case like this it is definately a must.If there is equipment that was left from the previous owner the tax lien could be in effect on the equipment and fixtures of the restaurant since they where the property of the previous owner.There could be other liens on the equipment also,it could have been financed or leased,and just because it is still there does not mean it is free and clear,it just means that they have not got around to reposessing it,or the previous owner could be in bankrupcy which takes awhile,and the equipment could be involved with that.As you can see there are very good reasons to involve an attorney in a matter like this.
Good Luck
Jim

wheregreggeats.com
  • Total Posts : 4530
  • Reward points : 0
  • Joined: 7/13/2003
  • Location: Northampton, MA
RE: leasing a building - Fri, 07/1/05 9:19 PM
0
Another thing to consider is that this is NOT uncharted territory.

Many a place has been built, gone out of business and replaced by someone who came in and made a go of it.

My point I guess is to find a lawyer who has done this before.

Check the UCC registrations. You may be able to do a cursory search yourself online.

mayor al
  • Total Posts : 15062
  • Reward points : 0
  • Joined: 8/20/2002
  • Location: Louisville area, Southern Indiana
RE: leasing a building - Fri, 07/1/05 9:35 PM
0

You didn't specify, so I will assume you aren't sure of this part. If you "take over" an existing lease there is a good possibility that those debts will become yours. A takeover can look attractive on paper as it often allows a minimum of cash up front, and may be at a rate that was settled some time ago (meaning a lower interest rate-maybe)
Leases have a ton of details that a lawyer can assist you with. Don't hesitate to call in the legal help in this one. It may save you a bunch of headaches later.

dreamzpainter
  • Total Posts : 1609
  • Reward points : 0
  • Joined: 2/6/2005
  • Location: jacksonville, FL
RE: leasing a building - Sat, 07/2/05 1:27 PM
0
Attorneys help in many ways, not the least is the maze of paperwork involved in starting any business. Years ago, I was looking at a property to lease for my repair business, luckily one of my customers (is it a customer when you trade services?) was an attorney, his search revealed that the property in question was an enviromental cleanup site and the leasee would be responsable for removing old fuel tanks and contaminated soil. I still don't understand why it wasn't the property owners responsablity but thats where Gary fit in. There were other stumbling blocks to the property as well that despite the location, location, location made it undesirable. Gary actually eneded up finding me a larger building in a great location for less upfront cost and less monthly payments. Now, many years later, I have another attorney who's cars I keep maintained, and whom I call on for answers to Insurance questions, rental agreements, back ground checks and yes even the occasional ticket.

donecookn
  • Total Posts : 16
  • Reward points : 0
  • Joined: 8/27/2003
  • Location: no where, NJ
RE: leasing a building - Sun, 07/3/05 9:58 AM
0
Thanks to all!
This would not be an existing lease. The folks who had this restaurant ran into some health problems namely cancer that took them down the tubes in months due to lack of health insurance. It was a partnership/ family owned I am told, and I did speak with a local attorney who said basically any money owed follows the people who owe it. I was also told to change the name and make sure I incorporated. Any thoughts on incorporating?
I really appreciate this site and you folks!

bassrocker4u2
  • Total Posts : 534
  • Reward points : 0
  • Joined: 11/12/2003
  • Location: new holland, PA
RE: leasing a building - Sun, 07/3/05 1:10 PM
0
incorporating is a great idea. this will cover your butt in case of a lawsuit. basically, the corporation can be sued, but your personal assets cannot be touched. there are other positive points as well.
like taxes.....

Scallion1
  • Total Posts : 418
  • Reward points : 0
  • Joined: 7/20/2004
  • Location: Yonkers, NY
RE: leasing a building - Tue, 07/5/05 1:50 PM
0
quote:
Originally posted by bassrocker4u2

incorporating is a great idea. this will cover your butt in case of a lawsuit. basically, the corporation can be sued, but your personal assets cannot be touched. there are other positive points as well.
like taxes.....



well, yes and no. incorporating may - should - protect you from creditors. but if the seller or lessor owed sales or withholding taxes, the respective taxing authority might well grab up the property to satisfy the unpaid taxes. and no incorporation that i know of will shield you from these agencies.
i had a friend who sold his restaurant business. a year or so later he had to take it back when the buyers defaulted on some of the purchase notes. to his horror, when he had successfully foreclosed, the irs came after the place to recoup unpaid payroll taxes.
the moral is that the previous posters are absolutely correct: get a lawyer and an accountant and have the deal vetted down to the last detail.

FYI:one other thing, not directly relevant to this thread, but something that not everyone knows: THERE'S NO SUCH THING AS PRIVILEGED COMMUNICATION BETWEEN YOU AN ACCOUNTANT AND HIS CLIENT. unlike your attorney, your accountant can be hauled up to testify against you, and, unless he wants to face contempt and/or perjury charges (i'll give you looooong odds on that one) he'll have to rat you out. so don't go out for a drink with your accountant and start shooting off your mouth about what's in your safe deposit box.