I am opening a 2nd location in a small town and got the building from the cafe owner who was going out of business. I negotiated the purchase with her so that the closing on the building is Dec. 2106, I can rent the space until then and the 1st 2 months are free or rent starts the day I open, which ever comes 1st. I can continue to rent for up to 9 years and each month, half of my rent amount is applied to lowering the purchase price. So, she moved her stuff out and on 10/10 I took over the space. Here is where my question comes in… She left the space extremely dirty and full of junk. I am getting a quote from a professional cleaning company to clean the kitchen and wonder if I can make her pay for it. Or if I can deduct it from the rent. She bounced checks to all her vendors so, I’m guessing she won’t pay if I give her the option. Also, I haven’s actually signed a lease yet because the lawyer is taking forever to get it done. I am also thinking I need to add another free month for the time to clean. Here is a link to a video of just some of it. http://vid.ly/0m9b1w What would you do?
If you were renting a house you would expect it to be ready for occupancy so why would a business be different? I would expect the building owner to have the place cleaned.
What does your contract say?..
But even if it say you are supposed to receive a “clean” premises I suspect any energy you spend on this will likely be wasted…Sounds like she does not have the resources to do much…
Royster- You are correct about her not having the resources. This statement is in the lease. I think I can deduct the costs from my rent.
" a) Landlord’s Work. Landlord shall deliver the Premises vacant, fully demised and in “broom clean” condition. Landlord covenants and warrants to Tenant that as of the date of delivery of possession: (i) the fire suppression system (which shall be installed by Landlord at its sole cost and expense if required by applicable codes) and any other systems installed by Landlord or otherwise existing at the Premises, shall be in good operating condition; (ii) the Premises complies with all laws, ordinances, and statutes applicable to commercial retail use;"
Sounds like it…So long as her idea of “broom clean” does not come into dispute…I might be tempted to send her a note saying you were going to deduct x amount and see what happens…Hopefully it will go your way and you will not have to hire lawyers to come out ahead…Good luck…
Several quick thoughts: 1) You have said you don’t have a lease, so what the lease might say on signing isn’t yet in play, 2) “broom clean” has frequently been taken to mean that there is nothing cluttering the space and they have swept it … not that it is dirty, 3) it looks to me like what you need is some ceiling paint and a bunch of elbow grease, maybe it’s not as big of a deal as you think … get your “crew” in there for 3 hard days of cleaning, and you’ll likely be satisfied, 4) why would you take possession of a building without a signed lease/purchase agreement that spells out in great detail all of the values and conditions? 4) can you tell the attorney that there is a dedline, and that after that date you will have to find alternative representation?
Piedad is right. You do not have a signed lease therefore the lease does not matter. I would not sign it until this is resolved. For example, you could ask for a rent credit for the cost of cleaning to be part of the lease. This would easily be accomplished by delaying the date you start paying rent.
It’s hard to understand why she would be out of business. Not.
She owns the building? Clear?
Sounds to me like either she is going to be sued and forced to sell the building to pay off debt (if it is in the clear), or that she won’t be able to make the mortgage payments. Either way, that leaves you high and dry.
Are you sure she is going to be able to hold out 14 months to close the sale?
You can put me in the “I don’t think I’d lease from her if I were you” camp… You could potentially lose everything if she screws up somewhere…
Then again… If your states dept of revenue or the irs seizes the building, maybe you could buy from them for a good price…
She doesn’t own the building free and clear, she has an outstanding debt on the building. It’s just slightly less than what I am paying, so after taxes and Realtor commission she would be left with nothing. All the lease negotiations that I have present have been give to her bank to get approved, I’m guessing she needs to do this to make the payments. I called her banker yesterday, and asked him to allow me more time to get the building ready and/or to get credit toward the cleaning. He couldn’t tell me much, but he did make his concerns about her using the funds I pay her to actually pay them. He suggested that I just buy the building now and get her out of the whole thing. He also suggested that he gets her to agree that my rent payments go directly to the bank and they will cut a check for any difference.
that sounds like an awful situation i would cut and run…unless you can buy the building??? the video doesn’t look to bad…nothing a few day and a bunch of elbow grease cant take care of.
If you do not have all the details worked out, I would suggest not doing anything until you do…If she goes bankrupt before you have a legally binding lease you might find yourself on the street without any recourse…
I agree with what everyone else is saying here. Be very careful before you put a dime into this place. She bounced, checks to her vendors, she left you the place looking like that, her own banker is worried that she will pocket the money you pay her how many more red flags and sirens to you need. I know you are probably excited to get this place rolling but don’t let your emotions run your business deal. Make sure you have crossed your t’s and dotted your i’s before you invest money that you could possibly lose due to a deal that is not solid.
Good advice in the posts above. Don’t put a dime into this thing until you have a lease and make sure you involve an attorney to review things to be certain that your investment is protected.
See above … plus, when you discuss all of the variables with an attorney, be sure to ask about something called a “preference” in the event of an involuntary bankruptcy case. It’s possible that even a signed lease could be set aside in a bankruptcy, so ask your attorney about it and how to protect yourself. Sounds like there may also be an opportunity to cut a deal with the owner and the lender (bank?) to buy her out???
I would go to the county assessor and find out who owns the mortgage see if you can negotiate a deal with them ahead of time in case she defaults you don’t want to be current on your rent and have a bank repo it because she isn’t making her payments. The good news is if she is behind you can negotiate with them to buy their position on the mortgage. then if she doesn’t pay you you can put her in default. In order to do that you will need to team up with someone who buys real estate contracts as an investment. They would actually repo it and rent to you and you may lose the ability to buy it for the deal you have with her. But its better than getting kicked out.
Update- Lawyer has added a “nondisturbance agreement” for the bank to sign. It is supposed to protect me in the event of a foreclosure. Also her bank will be receiving my payments directly. They are also suggesting to buy now and be done with her. There is a hair salon next door that is included with the building that is currently being rented for $500 a month.