Posted by eric on November 09, 2004 at 13:14:48:
Did you know of this lease prior to close of escrow? If so, even absent an assumption of this lease, you may have taken the property subject to the lease. This would be based on the same theory as a tenant on a long term lease when purchasing the property.
Go see an attorney for advise on your rights and remedies in this matter.
leased laundry machines …help - Posted by shirley
Posted by shirley on November 06, 2004 at 06:17:45:
I just purchased a 60 unit that the previous owner had signed a lease with a laundry machine company. There are 12 washers and 12 dryers. I was told that the profit was 50/50, and I could not get out of the agreement. As it turns out the laundry company keeps $576 a month and then splits the profit. The income is $140 a month to the complex and for that all water and electricity and heat is paid. What a rip. Then to top it all off, it is a 7 year lease, and the previous owner received a 9,700 decorating allowance? If the lease is broken, they have to pay it back. I as the new owner, want out of this rediculous set up. Do I have any alternatives? Thank you.
Re: leased laundry machines …help - Posted by JohnBoy
Posted by JohnBoy on November 06, 2004 at 23:31:56:
What does your purchase agreement say about taking over and honoring the lease? Does it address this issue at all?
Did you assume the lease?
If the previous owner leased the equipment and you never assumed the lease and your contract didn’t require you to assume the lease, then it would appear the previous owner has a problem. You as the new owner should be able to call the leasing company and tell them to come get their equipment out of your building. If the previous owner didn’t set this up right where you are required to honor the lease then it is their problem if they have to pay anything back. But it all depends on what your contract says about your obligation to honor the lease, if anything at all.
You need to have an attorney go over your contract to see what legal obligation you have pertaining to this if any at all.
Also, based on the way you described this you are not getting 50% of profits. Profit is the net proceeds after all costs.
Costs would be the $576 lease payment, water, utilities, and maintenance cost. Anything left would be profit. What you descrided is 50/50 of the GROSS income after paying the $576 lease payment.
As for the $9700 decorating allowance, did the owner use the $9700 to redecorate? If not, then that money should be credited to you if you are obligated to honor the lease.
But it sounds to me that if the previous owner signed the lease and you did not assume the lease when you purchased the property and your contract says nothing about you agreeing to honor and/or assume the lease and their is no lien against the property securing the lease, then I would think you would have no legal obligation to honor it. You need to verify that the leasing company does have a lien against the property securing the lease, and that your contract doesn’t have any provisions about you agreeing to honor or assume the lease. Have your attorney read over your contracts and see where you stand on this and make sure there is no lien on the property as security on the lease.
Did you get a copy of the lease?
Without all the details it is impossible to know where you stand on this. Have your attorney look into this.