Building Owner Absorbs Tenant’s Co-Working Subtenants and Business
June 10, 2018
Here, we represented a commercial landlord who had a lease with a company that licenses space to various subtenants for their small business needs. When the tenant was unable to keep up with its rental obligations, it surrendered the space to the landlord.
The landlord then had to decide what to do with all of the subtenants in the space. Evicting each subtenant would take a significant amount of time and money. Then again, it’s not every landlord that wants to take over a defaulting tenant’s co-working business.
The subtenants were actually making timely rental payments to the master tenant under their various subleases. Therefore, the landlord decided to completely take over the tenant’s business. The landlord created a new entity and assigned each license from the previous tenant to its new entity. Our office helped make the transition as smooth as possible by handling the agreements and assignments of the deal. We had to make sure that each subtenant was properly notified of the assignment, that the security was carried over properly, and that the landlord was as protected as possible from any liability that could have been incurred by the previous tenant. We also had to engage in a due diligence project to ensure that the tenant had the right to assign each license and all of the equipment and fixtures related thereto.
This story began with landlord suffering a defaulting tenant, but the story ends with the landlord not only getting the rent it wanted per square foot, but it got a new business venture as well.
Respectfully submitted,
