Subject: Lease Assignment Diligence Items and Required Protections Before Closing
Landlord and Assignor,
The Incoming Tenant is evaluating assumption of the Crestline Plaza lease in connection with the purchase of the restaurant business. Before we can proceed to closing, we need to confirm the exact lease position being inherited and resolve several items that materially affect the transaction.
Please provide or confirm the following:
1. Landlord consent and recapture
- Written confirmation whether Landlord is willing to consent to this specific assignment.
- Written confirmation that Landlord will not exercise any recapture or termination right in lieu of consent for this transaction.
- A complete list of all conditions to consent, including review fees, required financials, form of guaranty, and any required security deposit.
2. Remaining term and renewal
- Confirmation that the current expiration date is December 31, 2026.
- Confirmation whether any renewal right remains available, whether any notice has already been given, and whether Landlord will grant the Incoming Tenant either (a) the existing 5-year option, or (b) a replacement extension/new lease.
- If the existing option is not transferable, please provide proposed extension terms now so the business acquisition can be underwritten on a reliable occupancy horizon.
3. Defaults, arrears, and cure
- A current landlord ledger showing all amounts due through the anticipated closing date.
- Written confirmation of the unpaid CAM true-up amount referenced as $14,200 and any other unpaid rent, CAM, taxes, insurance, utilities, percentage rent, late fees, interest, or legal fees.
- Written confirmation that all existing defaults will be cured in full at or before closing.
4. Estoppel certificate
Please deliver a current landlord estoppel, dated close to closing, confirming at minimum:
- current base rent and additional rent;
- percentage rent status and whether any sales-reporting issues exist;
- the exact security deposit currently held;
- all defaults and cure amounts, if any;
- all amendments, side letters, waivers, and notices;
- whether any renewal, expansion, termination, or other option exists;
- whether Landlord has issued any default, recapture, relocation, redevelopment, or termination notices.
5. Security deposit and guaranty
- Confirmation of the lease-required deposit and the amount actually held by Landlord.
- Confirmation whether the deposit has been drawn down to one month and the exact amount needed, if any, to restore the required balance.
- Confirmation whether Landlord will require any new or increased deposit and whether any personal guaranty will be required from the Incoming Tenant's principals.
- If a guaranty is required, please provide the proposed form and confirm whether a burn-off or other limitation is available.
6. CAM / NNN exposure
- Copies of the last three years of CAM, tax, and insurance reconciliations and the current year budget.
- Detail supporting the administrative fee and any capital expenditure components included in CAM.
- Confirmation of any pending or planned capital projects that may be passed through.
- Confirmation of how any pre-closing reconciliation or true-up will be allocated so the Incoming Tenant is not charged for periods before takeover.
7. Use and operational restrictions
- Confirmation that the Incoming Tenant's intended restaurant operations will comply with the permitted use clause.
- A copy of the coffee/espresso exclusive or a written summary of the exact restrictions and any permitted incidental beverage sales.
- Written approval of any transition closure period needed for turnover, training, inventory, permitting, and minor improvements so that no go-dark default is triggered.
8. Repairs, systems, and condition
- Service and maintenance records for HVAC, hood, fire suppression, grease interceptor, plumbing, electrical, and storefront systems.
- Confirmation of the age and current condition of major systems serving the premises.
- Disclosure of any known deferred maintenance, code issues, health department issues, or repair notices.
9. Surrender / restoration
- Written confirmation of what Landlord would require to be removed at expiration or earlier termination.
- If possible, written agreement that existing restaurant improvements in place as of closing may remain at end of term, except for any specifically listed items.
10. Mortgagee / non-disturbance
- Confirmation whether Meridian Bank consent is required for the assignment.
- Confirmation whether a non-disturbance agreement can be provided for the Incoming Tenant.
11. Full lease file
Please provide the complete lease package, including all amendments, exhibits, guaranties, side letters, notices, default letters, estoppels, and any prior assignment/subordination documents.
Requested protections before closing:
- Cure and payoff of all existing defaults and arrears by Assignor;
- landlord estoppel in form acceptable to the Incoming Tenant;
- clear allocation of all pre-closing liabilities to Assignor, including any later-billed CAM true-ups attributable to pre-closing periods;
- written confirmation of the exact security deposit balance and who funds any shortfall;
- waiver of recapture for this assignment;
- either a lease extension, a new lease, or a transferable renewal right sufficient to provide post-closing runway;
- written approval of the Incoming Tenant's intended use and transition closure period.
Please send the above as soon as possible so we can determine whether the Incoming Tenant can proceed.
Thank you,
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