Our company is in need of new space. We've found a few, some having current tenants. Generally, are tenants entitled to their space for the remainder of their lease, or would we have the option of terminating so that we could begin renovation and build out for our business?

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Posted by JohnnyKilroy

Cajun Navy Vice Admiral

Member since Oct 2012

39992 posts

Posted on 10/21/25 at 10:39 pm to AUjim

quote:
Generally, are tenants entitled to their space for the remainder of their lease, or would we have the option of terminating so that we could begin renovation and build out for our business?

Generally you cannot terminate. Most commercial leases are going to have language prohibiting a unilateral termination by a new owner.

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Posted by yellowhammer2098

New Orleans, LA

Member since Mar 2013

3863 posts

Posted on 10/22/25 at 6:00 am to JohnnyKilroy

quote:
Generally you cannot terminate. Most commercial leases are going to have language prohibiting a unilateral termination by a new owner.

This is correct.

I would bring up two things - one, you can always do a "cash for keys" situation. This is much more common in apartments, but basically you offer the tenant some amount of money to walk away from the property. During a sale, you may be able to negotiate it into the purchase price, so basically you increase the purchase price by $50,000 and the owner pays that money to the tenant to walk away at the close of sale. Property appraises for your purchase price and basically you've rolled that additional cost into your financing.

Two, I would just reach out to whoever has the property listed. It is possible that an in-place tenant is actually month-to-month where you would have the ability to terminate the lease. Also, it is going to take you some period of time to close on the property, so if their lease has 6 months remaining, there may end up only being a month or two after you actually acquire the property that the tenant is still there.

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Posted by Im4datigers

Northern Virginia

Member since Oct 2003

4633 posts

Posted on 10/22/25 at 12:57 pm to yellowhammer2098

Most of the above is spot on. Any way to subdivide the building and keep them in partially while you grow or do you already need 100% of the building space out of the gate.

Also, if you need financing let me know. If it’s at least 51% owner occupied you can do an SBA 504 loan and finance up to 90% LTV and include some of the buildout costs too. Rates are very attractive there right now. Sub 6% rates on the 504 piece right now fixed for 25 years. Lnobles@redstickgroup.com

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Posted by baldona

Florida

Member since Feb 2016

23245 posts

Posted on 10/22/25 at 2:48 pm to Im4datigers

quote:
Also, if you need financing let me know. If it’s at least 51% owner occupied you can do an SBA 504 loan and finance up to 90% LTV and include some of the buildout costs too. Rates are very attractive there right now. Sub 6% rates on the 504 piece right now fixed for 25 years. Lnobles@redstickgroup.com

Is this only for new purchases?

OP, I would talk to everyone involved. The terms on the contract should be spelled out, but its very possible that one of the tenants wants out and you could work a deal or that the landlord is willing to do something. I guess what I'm saying, is you never know until you ask.

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Posted by Im4datigers

Northern Virginia

Member since Oct 2003

4633 posts

Posted on 10/22/25 at 4:06 pm to baldona

quote:
Is this only for new purchases?

No, you can refinance into a 504 as well owner occupied. Keep in mind the first trust mortgage (~50% LTV) is going to be at market rates (says 7’s). The SBA portion is the piece that’s under 6% right now

A lot of people that bought property using a 7a loan are refinancing with 504’s too.

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Posted by AUjim

America

Member since Dec 2012

3761 posts

Posted on 10/22/25 at 8:17 pm to baldona

Very much appreciate the guidance yall