Quick take
- Buyers treat the lease as part of what they buy.
- Read the assignment clause before you list.
- Leasehold land can add a second landlord to the deal.
- Ask for a release from any personal guarantee.
Why Buyers Care
A buyer of a location based business pays for the right to stay. If the lease is short, expiring or too expensive, the buyer prices that risk or walks away.
A month to month lease with no scheduled increases looks easy but is a red flag at sale time.
The Assignment Clause
Most leases say whether a tenant can transfer the lease and whether the landlord must approve. Language that consent cannot be unreasonably withheld helps the seller.
Hawaii law also limits what a landlord may charge for consent on some leases, so ask your attorney how it applies to yours.
Leasehold Land and a Second Landlord
Much Hawaii land is leased, not owned. If your building sits on leased land, or your lease comes from a master lessee, there may be a second party whose approval matters. State owned leased land can add its own approval process.
A change in the ownership of the tenant company can also count as an assignment in some leases, so a stock sale is not always a way around consent.
Personal Guarantees and Rent Resets
If you signed a personal guarantee, it may survive the assignment. Ask the landlord for a written release as part of the deal.
Buyers also underwrite rent at market. A cheap lease that resets after the sale lowers what they will pay, so know when your rent can change.
Timing
Landlord approval can take weeks or months, and lenders or landlords may ask for further paperwork. Start the conversation as soon as you have a buyer.
A Simple Lease Review
Before you list, check five items: the end date, renewal options, rent increases, the assignment clause and any personal guarantee. Write them on one page for your broker and attorney.
That page also helps a buyer decide faster.
Next Steps
Read how retail shops are priced and how buyers finance. Then ask what your business is worth.