In this transcript, Clay Clark (U.S. SBA Entrepreneur of the Year for the State of the Oklahoma) and Wes Carter (Published attorney) discuss the importance of leases on Thrive15.com, the most elite sales training program.
Clay Clark: Wes Carter. How are you, sir?
Wes Carter: Doing well. How are you doing?
Clay Clark: I am doing well. I’m here talking with you today about leases.
Wes Carter: Leases.
Clay Clark: Leasing a building. This is something I’m excited to talk about. I sincerely am, because every entrepreneur watching this, at some point you’re going to have to move out of your mom’s basement or maybe your already have moved out of your mom’s basement, and you’re going to have to actually have an office somewhere. You’re going to have an office somewhere. You have to lease something or buy something. This is something that we can all relate to.
Wes, our good friends at Webster define a lease as: “A legal agreement that lets someone use a car, or a house, or an office for a period of time in return for payment, or a contract by which one conveys real estate, equipment, or facilities for a specified time and for specified rent. Also, the act of such conveyance, or the term for which it is made.” What are we talking about with leases?
Wes Carter: Leases are basically just agreement that, “I’m going to let you use this space or this thing for a certain period of time. Here’s how much you’re going to pay me,” and all the conditions that go with that.
Clay Clark: Even though the definition of a lease isn’t that complicated, the idea of a lease could be devastating to your business if you have no idea what’s in a lease.
I’m just going to share a story about somebody that we could all maybe relate to. There’s a one Sam Walton. Perhaps you’ve heard of him. Perhaps you’ve been to his store Walmart and bought various things there.
Sam Walton started off his business by opening a five and dime store. It was like a retail store before the big box stores that he created. He worked his butt off. Rumor has it. He was working 60-70 hours a week, many times working 80 hours a week starting at five in the morning, work until eight o’clock at night. He and his wife Helen are putting everything they have into the business.
Then one day, the landlord says, “Sam, we have decided that you can no longer lease here.” He says, “What do you mean? All my customers come here.” They say, “Well, we have a clause that means that I can now tell you that you can no longer be here, but my son is going to take over your store for you with all the fixtures, and the name, and the reputation, and the goodwill. He’s going to now take over your physical location, and you have to move out tomorrow.”
Sam said, “Are you kidding me?” His book “Made in America,” he talked about how it … It was four years of work gone like that. I think it’s important that all of us take the time to listen up here and to really learn about leases. I’m going to get into these. I would just love to hear your, from a legal perspective, comment on these.
Wes Carter: Okay.
Clay Clark: Every lease should include these three items. One is a very specific detail of what the landlord’s responsibilities are and what the tenant’s responsibilities are. Go ahead mix ... Walk me through that. Thrive15.com can also help you with sales training.
Wes Carter: Yeah. Very important. You got to talk about your hitting air. If that breaks that that can be five, $10,000 you’re talking about. A lot of releases comes standard that the tenant’s responsible for almost everything; the plumbing, the sprinkler system, the air conditioner, some on the roof, the outside sidewalk. If those things are broken or need repair, that’s just more money out of your pocket.
Clay Clark: Real talk for a second. There was a church that I worked with years ago, and very good friends with the gentleman how was in-charge of it. I guess their air condition unit went out in a space they were leasing. It was like 40 grand to replace the air conditioning unit. They’d thought it was covered in their lease, but it wasn’t. Is this common for landlords to put in this sort of “huh-hah?”
Wes Carter: Very common. I review leases all the time, and almost every lease I get, the starting point is tenant pays for it.