Commercial Lease Buyout Calculator
Estimate the cost of buying out a commercial lease early. Calculate remaining rent obligation and unamortized costs.
Landlord's remaining TI and leasing commission costs
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Expert FAQ
What are the typical tax implications for a tenant receiving a buyout?
For the tenant, a buyout payment is often treated as capital gain under Section 1241, representing the sale of their leasehold interest. However, if the payment replaces lost profits, it may be taxed as ordinary income.
How is a "Lease Buyout" different from a "Termination Fee"?
A termination fee is often a pre-negotiated penalty clause in the lease. A buyout is a separate negotiation, usually initiated because the landlord wants to redevelop or the tenant needs to exit, often involving more complex valuation of the remaining term.
What are common "Clawback" or "Rent Credit" provisions?
Landlords may include clawbacks if a tenant enters a new lease nearby within a specific timeframe or rent credits if the landlord quickly finds a replacement tenant at a higher rate.
How does a buyout affect a landlord's dynamic with replacement tenants?
A successful buyout allows a landlord to deliver a "dark" space to a new credit tenant (e.g., a national retailer) on an accelerated timeline, often significantly increasing the property's cap rate and valuation.
What is a "Surrender Agreement," and why is it critical?
The Surrender Agreement is the legal document that formalizes the handover. It ensures the tenant is released from all future liabilities (restoration, environmental, taxes) in exchange for the buyout payment.