I sold one of my stores to a friend. I made it a real good deal with little down and monthly payments. Things went well for a while and now things aren’t going so well. I have two questions for the think tankers.
I kept the lease in my name and i never had him sign anything saying he was subletting. He pays the rent but has stopped paying payments to me. Business is getting slower and slower and I don’t think he will be able to keep paying rent much longer and I don’t want to take back that bad of a store. The landlord said I should just change the locks. And I havnt talked to a lawyer yet. Not sure what to do
Basically we just shook hands and he handed me a small deposit and I said I’d email him everything I want in the contract. I emailed them to him and he said he’d wait until the lawyer got it together. Long story short he never signed anything and is now threatening to sue me because my new store that’s five miles away has cost him business and in our contract that he never signed I said for him to not compete with me. What a nightmare. Not sure what to do
Talk to your attorney and follow his or her advice.
You have legal obligations in the lease that are very probably enforceable and are potentially a significant liability. (Attorney again) Since you also do not have a signed purchase agreement you may be exposed on any number of other things as well.
Probably not. There is likely plenty of evidence of a deal (payments to vendors, wages paid, rent, presumably all from a different bank account from a different entity etc etc) but might not stop a creditor from chasing you.
The kicking out is what I’m worried about. The lawyer wants me to go through the eviction process but im sure he will fight it and it’ll take months to get him out.
Maybe go in there and talk man to man and ask him for the keys since you have the lease in your name.
I’m sure he is just draining whatever he can out of the store or maybe he just wants to walk away maybe.
Are the utilities in your name? If so, you can shut them when you want.
I’ve tried the man to man thing and it didn’t go so well. The utilities are in his name.
The worst part about it is that he’s losing money every month. Me taking the store back is doing him a favor. I’ll be losing money until I get it back on track.
We are all in a vacuum here and none of us are attorneys. Good that you are talking to one.
Eviction generally does NOT take months in commercial leases. In some cases it can be a matter of less than a week. You are likely thinking of residential leases which can be a nightmare in that regard? It will largely depend on what the lease document says. You may or may not have the right to evict, but the Landlord almost certainly does.
It sounds like you may have done an improper lease assignment since you stated at the beginning that you never formalized it with the landlord. That could give HIM the right to evict as a default on the assignment clause of the lease.
Of course just having the right to do it provides some leverage.
There is an old saying in the restaurant business that when you sell a business and then get it back you make more money the second time you sell. Unfortunately this relates to the necessary and proper paperwork relating to the first sale. Another thing I learned many years ago is that never sell a restaurant and carry part of the purchase price unless the buyer has enough skin in the game to make him care. Personally I would never take only the business as collateral. For me there has to be some other asset to back it up. If there are no other assets then there is the question of whether it is the wrong buyer. I don’t think I want to be in the position of depending on the ability of the buyer to run a profitable business as my only source of secured payment.
Excellent advice. Looking at the data on the sale of pizza businesses about 2/3 of the transactions include a seller carry of some amount. The median down payment on those transactions is just short of 50%. A few transactions have a two year payback and I do not see any with longer than 10 years. Most are 4-5 years with interest rates of 6-8%. Of course these are brokered transactions so you have a scenario where the parties are getting professional advice.
I’ve decided to hold off on the eviction, stop trying to talk to him or argue with him for a month. He has some mailers going out that may give his business a little boost.
It did not sound like a little boost would solve the problem. I suggest you go forward with your attorney and perhaps just formally notice him that eviction is a possibility if he does not meet his obligations. Otherwise, what is to stop him from just taking the “boost” and sticking it in his pocket and still not paying you?
Fair enough. At the same time, I would use that month to put all your ducks in a row so that if you do need to take action you are fully ready to go. To me, that would include spending the time with your attorney now so you know exactly what your rights are, what steps to take and how to go about them. The only downside is spending some money with your legal advisor which is wasted if you do not end up having to act on it… but the upsides are significant.