College Student Fails to Verify Cafe Lease Before Buying

A college senior eager to launch their own business fell victim to a common trap: trusting a verbal promise over legal proof. Without checking the coffee shop’s actual lease status, the student signed a transfer deal and paid tens of thousands — only to be evicted months later.

The short answer: Yes, the scammer was forced to return part of the money — but only after court mediation. The student lost $3,000 and three months of effort. Always verify the lease and ask who the real landlord is before paying any transfer fee.

How a College Graduate Got Trapped in a Café Transfer Scam

Xiao Xiang, a soon-to-be university graduate in Shanghai, saw national support for youth entrepreneurship as the perfect opportunity to become his own boss. He began negotiating to buy an existing coffee shop near Songjiang University Town from the current owner, Yang, who claimed he could transfer the business and lease to Xiao.

In their agreement, Xiao was to pay Yang a total of 200,000 RMB (about $20,000) in three installments for the café transfer. The original lease was said to run until the end of 2013. But Xiao made a critical mistake: he trusted Yang’s word without confirming the lease details himself.

What Went Wrong with the Coffee Shop Lease

After handing over the first payment of 80,000 RMB (about $8,000), Xiao discovered some harsh realities:

• Yang was not the property’s actual landlord — he was a sub-letter (second landlord).
• The master lease between Yang and the real property owner was set to expire in June of that year, months before the agreed transfer period ended.
• Shortly after Xiao took over the shop, Yang opened another coffee shop nearby, diverting all the regular customers away from Xiao’s location.

As a result, Xiao’s newly acquired coffee shop quickly became empty, with almost no foot traffic.

Court Mediation and Partial Refund

Xiao sued Yang, accusing him of fraud and asking the court to cancel the transfer contract and return the 80,000 RMB already paid. Court investigations revealed:

• The property had already been taken back by the landlord.
• Yang had charged a transfer price significantly higher than the market average for such businesses.

Judges also noted that Xiao, as a young entrepreneur with limited experience, had failed to properly vet the deal and had used the space for three months. After negotiation, the court mediated a settlement: Yang agreed to return 50,000 RMB (about $5,000) to Xiao.

Frequently Asked Questions

What should I check before buying a coffee shop lease?

Always confirm who the actual property owner is and verify the lease expiration date directly with them. Ask to see the original lease contract and check that it covers your intended operating period. Don’t rely on the seller’s verbal claims.

Can a sub-letter legally transfer a coffee shop lease?

Usually not without the original landlord’s written permission. A sub-letter (second landlord) often doesn’t have the legal right to transfer the lease or collect transfer fees. Always get confirmation from the primary landlord.

What red flags indicate a café transfer scam?

Red flags include: the seller refuses to meet the landlord, the lease end date is near, the price seems much higher than market value, or the seller plans to open a new shop nearby right after your deal closes.

Is it common for new business owners to lose money on bad leases?

Yes, especially in high-turnover sectors like cafés. Many first-time entrepreneurs skip legal checks and lose deposits or rent payments when the lease turns out to be invalid or expired.

How can a student avoid being scammed when starting a café?

Students should consult a lawyer or experienced business advisor before signing any contracts. They must verify all documents, meet the property owner, and ensure the business location has stable foot traffic and a valid, long-term lease.

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