HELP! I'm confused w/ this particular Lease Term

[hht1901]

I'm trying to open up new restaurant....(finally, after all those hard years... )

As I looked thru the terms in my Lease paper, I found something I'm not quite sure of.... I asked few people about it and..... they gave me different interpretations of this confusing paragraph...

Term states:

"In the event Tenant shall assign or otherwise transfer the lease, or sublet of permit any third party to occupy all or any portion of the premises, then Tenant shall pay to Landlord one-half of any consideration received by Tenant from any subtenant or transferee exceeding the sum of

1) the rentals due hereunder for the remainder of the terms
2) Tenant's reasonable costs and expenses incurred in connection with such subletting"



Part I don't quite understand is...... what exactly is "one-half of any consideration"????

If I sell my restaurant with premium, do I have to give up half of the premium I earn???

Can you please explain this term clearly to me....
I really need your help~~

 

[wwilse]

This is a common commercial clause that essentially means that if you re-rent the premises to a third party, then the landlord will receive half of your income, subtracting the rent you pay the landlord and any fees associated with the renting (i.e. broker and attorney fees). So if your rent is $1000 and you sublet to a tenant for $2000, then the landlord is entitled to $500.

As to your concern about whether the landlord is entitled to half your profit if you sell the restaurant; I wouldn't think so, but I'd suggest you insert language into the contract to avoid any potential litigation over this issue. Simply put, the language here is vague, and what you are concerned about could be argued either way.

I'd get a whole paragraph in there that describes each parties duties in the event of a sale; something to the effect that any sale shall be subject to the approval of the buyer by the landlord, consent of which shall not be unreasonbly withheld. Also something to the effect that Landlord shall not be entitled to any of the consideration of such sale.

You should have an attorney review this lease at legnth and make those changes. It sounds like a vague boilerplate lease that needs to be made more specific in your favor.