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For my restaurant venture is it best to hold the lease in the name of the company or my management entity that will be the mgr?

New York, NY |

Mgmt Co is manager of restaurant well as the majority owner and investor in the restaurant co. on the same terms as other passive members. Should the lease be held in the restaurant entity or the management entity which is a partnership between the two principals?

Attorney Answers 2


While its difficult questions like this without all of the facts and circumstances, the lease should probably be held by and in the name of the operating company. That said, I would recommend engaging an attorney prior to executing the lease, to ensure that its the best course of action given your business structure.

This advice is for INFORMATIONAL PURPOSES only and should not be relied upon as legal advice. No attorney-client relationship shall be formed as a result of the answer above.

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The answer depends upon many facts not stated in the question. The first one is: why was the management company formed in the first place? Although that structure is often encountered, it is also adopted frequently without proper analysis of the benefits, if any. I think the main questions are (1) are the passive investors aware of the lease structure and do they approve? If the lease ends up having residual value, are the passive investors to share in that value? (2) what will the landlord allow? Will he allow an entity that does not own the entire restaurant operation to be the lessee?

Louis E. Black is licensed to practice law solely in New York. His answers are for general information and no Answer or Comment shall be deemed to create an attorney-client relationship or create any right of confidentiality. The reader should never assume that this information applies to his or her specific situation or constitutes legal advice. Therefore, please consult an appropriate attorney in your jurisdiction and who is familiar with your specific facts and all of the circumstances Any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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