Your Actual Exposure: $320,000

A $4,000/mo general lease doesn't create $4,000/mo in liability. It creates $320,000 in total exposure across rent, personal guaranty, restoration, and every other clause your landlord drafted to protect themselves — not you.

Where $320,000 Comes From

Remaining Rent$168,000
Personal Guaranty$168,000
Restoration$30,000
CAM Charges$20,000
Early Termination$48,000
Legal Fees$20,000
Holdover$48,000
Total Exposure$320,000

What Most People Miss

Assignment doesn't reset the clock. If the business you're buying has 7 years left on a terrible lease, you're taking on 7 years of that terrible lease — personal guaranty included.

Key Risks in This Scenario

  • You become personally liable for a lease you had no hand in negotiating
  • Pre-existing lease violations from prior tenant become your problem at assignment
  • Seller's representations about lease terms may not match the actual lease language

How to Reduce Your Exposure

  • Review the actual lease document — not just the seller's summary — before closing
  • Negotiate a limited assignment guaranty: you're personally liable only for obligations arising after the assignment date

Frequently Asked Questions

Does the seller remain liable for the lease after I buy the business?
Often yes — original guarantors remain liable even after assignment unless the landlord releases them. Your purchase agreement should address this, and the landlord may require both of you to guaranty.
What should I look for in a lease when buying a business?
Remaining term and options, personal guaranty scope, restoration obligations, prohibited uses, CAM charge history, sublease and assignment rights, and any pending defaults or disputes.
Can the landlord refuse to consent to assignment of the lease?
Yes, if the lease requires landlord consent. The landlord can require financial vetting of you as the new tenant and can negotiate new terms as a condition of consent.
How do I handle a lease that's about to expire when buying a business?
Negotiate a new lease before closing on the business acquisition. A business without a secure lease has limited value — the landlord could lease to a different tenant when the term expires.
Should the purchase price be reduced if the lease has unfavorable terms?
Absolutely. An above-market lease with an unlimited personal guaranty reduces business value. Model the total exposure of the inherited lease and discount accordingly.