Expert: Dick Dennis - 9/28/2006

Question
my father owns a dounut shop for about 7 years and the property own has just anounced that he will be selling his land. i am wondering if my dad is at a total loss. he bought the shop from the previous owner for about $80,000, will he be able to somehow get back this money from someone or someplace? if the new owner decideds to cancel the current lease contrace(ends next year FEB) or wait until it is up and just decide not to further lease to my father, then that would mean my father has lost his 80,000? please, if there is anything that my father can do to save his business, can you help by educating us on how? does the new property own have to buy the dounut shop business if he decides to stop the lease? my father is 60 years old and cannot afford to lose his only income/life.

thanks for your help

jeff

Answer
One of the smartest things to do when you buy a shop of that kind is to insert a clause that allows you to have first refusal should the owner of the land decide to sell. Well, now the seller is doing just that and if the new owner decides to put his own donut shop in there, there is nothing your father can do, except that the fixtures and equipment I presume belong to your father.

The property will be sold with the lease. That means the new owner must buy the property subject to the lease your father has on the donut shop. It might be a good idea for your father to approach the owner and see if he could buy the property. Or, he could ask the owner to renew the lease for a specific amount of time with him. But be prepared for the owner to require more rent. On the other hand, an investor who may be interested in the property would not buy it unless there was a lease for a longer time than next February. That is, unless the owner would expect the buyer to put in his own business in that spot.

I do wish you well.

Dick Dennis              dixiedee13@aol.com