The Pet Care Facility Lease: Zoning, Permitted Use and Assignment
Many boarding, daycare and grooming businesses operate in leased buildings. Because finding a space where animal services are permitted, neighbors are comfortable and the building suits the work can be difficult, the existing lease is often one of the most valuable parts of the business. Buyers and lenders therefore review the pet care facility lease carefully before an acquisition can close.
This article focuses on the lease terms that matter most for pet care businesses. Every lease and location is different, and zoning, permitted-use, noise and outdoor-area requirements vary by jurisdiction. This is not legal or zoning advice; buyers should have an attorney review the lease and any assignment or new lease documents.
Why the Lease Matters So Much
- Relocating may require finding another location where pet care is permitted
- The space is often improved specifically for animals
- Pet owners choose the business partly for its convenient location
- A short or uncertain lease can limit the business’s value and financing
Our guide to pet care business valuation explains how lease terms affect price.
Term and Renewal Options
How long is left on the lease, and does the tenant have options to renew? Lenders often want the term, including options the tenant controls, to extend appropriately beyond the loan term. A buyer may need to negotiate an extension or new lease with the landlord as part of the purchase.
Assignment and Landlord Consent
Many leases require the landlord’s consent to assign the lease to a buyer. Landlords may review the buyer’s finances and experience, ask for a personal guarantee or charge a fee. Some leases treat a change in ownership of the tenant company as an assignment. How a particular lease can be transferred depends on its terms and applicable law.
Permitted Use
The lease should clearly allow the services the business provides, such as boarding, daycare, grooming, training or retail. Overnight boarding in particular may be addressed differently from daytime services. Buyers planning to add services should confirm the lease permits them.
Zoning
Even if the lease permits a use, local zoning must also allow it. Zoning rules, special permits and conditions vary by location. Buyers should confirm with qualified professionals and, where appropriate, local authorities that the current operation is permitted, and understand any conditions that apply.
Noise, Odor and Neighbors
Leases in shared buildings may include provisions about noise, odors, waste and hours. Review any history of complaints from neighbors or the landlord, since disputes can affect renewal and operations.
Outdoor Areas
Outdoor play or relief areas can be important for daycare and boarding businesses. Confirm whether outdoor areas are part of the leased premises, any restrictions on their use and who maintains fencing and surfaces. Our guide to buying a dog daycare business discusses how outdoor space affects operations.
Improvements, Repairs and Building Systems
- Who owns tenant improvements such as kennels, drainage and flooring
- Whether improvements must be removed when the lease ends
- Who maintains HVAC, ventilation, plumbing and the roof
- Rent, scheduled increases and shared costs
What Lenders Look For
- A lease term, including options, that supports the loan term
- Assignment to the borrower or a new lease in the borrower’s name
- Landlord documents the lender may require, such as estoppel certificates
- Permitted use that covers the business’s operations
Requirements vary by lender and program; our guide to SBA loans for pet care businesses explains how lenders evaluate acquisitions.
When Buying the Property Is an Option
Sometimes the building can be purchased along with the business. Our guide to pet care facility real estate compares buying and leasing.
A Note for Sellers
Sellers who confirm renewal options and discuss assignment with the landlord before marketing the business can make it easier to sell and finance. See our guide on how to sell a pet care business.
US Professional Funding works with buyers acquiring existing pet care businesses in leased locations. Learn more about our pet care facility acquisition financing.
