Getting Even With A greedy Landlord
The small neighborhood coin laundry was in a large city, and despite its size, did pretty well in cash flow. The rent was a little high, but it was in an old apartment building that housed about twenty families and had no laundry facilities in the apartments.
The building owner and laundry operator got along well and had an agreement that was basically rent on a month to month basis. When the building was sold, the owner asked the buyer to give the laundry a break, and the buyer at first agreed.
However, he promptly changed his mind, gave the laundry thirty days notice and began to shop for new equipment that he could run for himself. He had no concept of the many complications he bought for himself by taking unfair advantage of the coin laundry owner.
Much of the plumbing, wiring and tenant improvements had been done in years past and were done without permits. If they found out about it, the city would not be pleased, and the old laundry owner made sure that city building inspectors found out.
As the new equipment was delivered and paid for, the property owner hired a crew of non-union, unlicensed folks to get the coin laundry back in business. They were putting up a new light fixture when a city electrical inspector came in and shut down the entire job. They needed to apply for and receive permits. They found that the city inspector was a union man.
Everything had to be entirely re-plumbed, re-wired and re-done. They needed to wait for a city worker to come by and approve every step of the construction. The city inspected in that part of the city on Tuesdays only. They seemed to make any excuse to avoid coming at all.
It took more than six months to have the job completed, and the cost for the landlord was many thousands of dollars more than planned for to own a little coin laundry business. The former coin laundry owner was very pleased with the way it all came down.
The laundry operator was about at the end of his lease and the new property owner decided to triple the rent and double the triple net fees to repave the parking lot. While the laundry owner was contemplating the landlord’s “offer”, the landlord asked two different equipment dealers to bid on the location. He wanted to sell them the location and get higher rent too. They were told the laundry wasn’t run right, but was still making money, lots of it.
The laundry was doing OK at the current rent, but would be a loser at triple the rent. So the laundry owner opted not to renew his lease. Both dealers had told him they had been approached, and also reported to him what the landlord had said. He could see this was a move to force him out.
He was angry, and wanted to get even, rather than seek legal action. He re-read his lease, which said that the laundry space was to be returned in its original condition, broom clean. Normal wear and tear excepted.
Since he was the first owner of the business, he knew exactly what the original condition was, and that is how he intended to return the space to the landlord.
All electrical plumbing and venting for the coin laundry was removed to the bare walls. The equipment was removed. The dryer curtain wall was torn down. All traces of a coin laundry were gone except for the vent holes in the roof. This operator even poured concrete down the drain lines and smoothed them off at floor level.
The original property owner was a good, helpful guy. As a favor, he cut the dryer exhaust vent lines in, so in returning the space, the operator did not feel a need to restore the roof to it’s original condition.
Before he could re-rent the space, the land- lord had to spend thousands to put a new roof on the space, paint and plaster. There never was a coin laundry in that space again. The local equipment dealers wouldn’t touch it as they knew what kind of a man the property owner was, and besides, the laundry operator also had four other laundries, and they wanted his replacement business.
Eventually the laundry space became part of a local thrift store run by a charity. The rent they paid was lower than paid by the laundry owner.
This coin laundry was in a quaint boutique center in a seaside coastal suburb of a major city. The laundry was the only one in a radius of about six miles, and did very good numbers since there was no competition. Then two things happened.
First, the long time owner of the property died and left it to his son, who in turn gave it to his wife to manage. She thought users of coin laundries were not the class of people she wanted seen frequenting what she saw as her high toned center.
Second, the laundry lease had a little over a year to run. The laundry’s owner and the landlord’s wife were not about to see eye to eye on anything, let alone a reasonable extension of his business lease.
He felt that the manager was giving him a rotten deal. He wanted to get even, but really had no idea how to do it. As time passed, he tested the waters to sell his equipment, and found it was worth very little. Clearing out interior hookups and venting would be very expensive. Just going to the dump with debris would cost hundreds.
His decision was complex. First he bought a Nevada Corporation for the laundry, all with proper notice to the landlord, and it began paying the rent. As the lease was ended, he sold what he could and walked away, letting her pay for the clean up. By doing this, he saved himself a lot of money and sent her into a state of apoplexy. He had the corporation between himself and the landlord and felt that legally he was not personally liable for those costs.
Whether or not he had liability, he moved out of state and retired.
Paying for the complete change over of the coin laundry space cost the property owners lots of money and much time they were not planning for. They looked around for somebody to sue, and found the laundry owner basically untouchable. So cash wise the laundry owner was the winner. He got even in his own way.
One new property owner tried to clear out all his tenants by exercising a contract right in the lease allowing him to charge the tenants with expensive premises improvements. The triple net costs jumped by more than triple. He said you can pay up or leave, and many tenants left. It included the laundry owner who knew his lease and therefore ripped out all the plumbing and wiring, plus he filled the plumbing outlets with concrete. The landlord was angry, but the laundry owner was within his rights. It would have cost too much for the landlord to put them back in, so no more laundry at that center.
It’s best to avoid such situations by -preventing them in the first place
Keeping your lease fresh with still years to run is one of the best ways of protecting your coin laundry investment from predatory practices by greedy landlords. There will always need to be a good reason for asking for more time, such as adding equipment, etc. However you do it, you need more time on the lease of a good laundry. If yours is a marginal operation, you may wish to keep the lease obligation as short as possible.
Ask for options at fair market rent to extend control of the premises. Options put the control of the decision to stay or go in your hands, not the landlords. Usually, options are free for the asking, but occasionally you might have to give a bit more rent as an inducement for the landlord to give the option.
Don’t think your lease is safe just simply because you and the landlord get along so well. He may sell the property or be hit by a truck, and you will be dealing with someone you don’t know. In almost every case, especially after a sale of the property, a new owner feels the need for getting their money back, and doing it quickly. That means higher rents if they can get them. Owning the building is a safer way, but that may not be financially possible. Right of first refusal is another, but unless it is strongly written it may not protect you.
Don’t wait for the end of your lease period to ask that your lease be extended. Work on extending your lease, and do it right away. While your laundry still has considerable time left on it’s lease, it still has value, and can still be sold. Only by asking for more time can you determine if the property owner is willing to keep you as a tenant.
When property owners won’t talk about extending the lease, or continually put you off, it may be time for you to sell your business and let someone else worry about the problem. Believe it or not, the more time you have left, the more likely it is that you will get extended with options. Having less time makes you vulnerable to being turned down.
Read your lease documents carefully. No one should know better what it says than you do. It represent the core value of your coin or card operated laundry business. If you can not find a way to save your business and can’t sell it, then it has little or no value. At that point there is very little you can do.
In the cases above, the laundry owners felt abused and unfairly treated. They didn’t just get mad, they tried to get even. Even a nice person like you may consider getting even with a greedy landlord if they abuse you and your laundry.
Date:-05/28/2011
By:-Admin
