Buyers fall in love with a concept and forget to read the lease. Sellers list a great year of numbers and forget the lease is what a buyer is actually inheriting. Either way, the lease is often the real deal — not the P&L.
What to check first
- Remaining term plus renewal options. A five-year SBA loan needs a lease that outlasts it — most lenders want to see the lease term (including options) cover the loan term.
- Assignability. Some leases require landlord consent to transfer, which can be withheld or delayed. Confirm this in writing early, not during closing week.
- Rent escalations. A lease with 3%–5% annual bumps changes your margin math over a five-year hold in a way flat rent doesn't.
- Personal guarantees. Find out whether the current owner personally guaranteed the lease, and whether a new tenant will be expected to as well.
- Use clause and exclusivity. Confirm the permitted use matches your concept, and check whether the landlord granted any exclusivity that could restrict future changes.
The practical upshot
For sellers: get the lease assignment question answered with your landlord before you're deep into a buyer's due diligence — it's the single most common late-stage surprise. For buyers: read the lease before you fall in love with the financials. A great restaurant on a bad lease is still a bad deal.