Apr
29
Exiting a commercial lease early will affect my real property how?
By
My ex general partners want to close the business and exit the lease early. I am still on the lease with them. I have tried to get off of the lease, but the landlord won’t allow it because my partners have no assets, therefore they are a greater risk. I listed all of my assets on the lease agreement which us 3 partners personally signed. My main question is, can I lose my 2 condos over this. If yes, how? What happens? Can I claim bankruptcy? If I do, will I lose my condos, or will I be able to keep them. Will I need to hire a lawyer? How will I pay my lawyer, with what money?
The business is not making any money. The partners do not have money for next month’s rent…
Passive Income
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2 Comments
September 9th, 2009 at 10:38 am
The Partnership needs to hire a lawyer immediately to negotiate your way out of this lease, and to be sure that NOBODY gets anything out of the Partnership until that liability is covered.
If you just let this happen and do nothing, the landlord can sue you for any losses from the early termination. They’ll probably have another tenant in before the case is resolved, but then again, you might just find yourself on the hook for the rest of the term. I’ve no idea how much that is.
You personally don’t need a lawyer yet, the Partnership should hire one to resolve this before winding up.
September 9th, 2009 at 10:06 pm
Your main question is can you lose your condo’s over this? No; the worst that’ll happen with the condo’s is that a lien may be placed on one of them (only after a judgment against you) which would have to be paid at the point of selling the condo. If you file bankruptcy will you lose them? No; bankruptcy destroys your credit but it protects your property (at this time of a record number of foreclosures there is also a record number of bankruptcies from people stopping the mortgage companies from taking their homes away from them).
I will tell you that the landlord has a responsibility to mitigate the damages, meaning he must make every reasonable effort to re-lease the property (he must run ads, post signs, show the property to perspective tenants and not turn away qualified tenants); once the land lord does re-lease the property you are only on the hook for the amount of time that the property sat vacant, not for the duration of your lease. If he can not find a new tenant you are on the hook for the balance of your lease. The previous answer was sound, that the company should consult an attorney (but only regarding the dissolution of a corporation), not even a good lawyer will get you out of a lease unless you can demonstrate that the property became inhabitable causing you to move.
Your partners should be jointly liable but the landlord can sue who they wish and it’s you that have the assets; so if you’re the only one sued and you lose, you would then have to sue your partners to recover their fair share of the damages.