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  1. #1
    Cabinet1 is offline Junior Member
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    Exclamation I have to break my commercial lease......Need advice now!!!

    What is the name of your state (Georgia)?

    I started a new business roughly 1 1/2 years ago and signed a 5 year commercial lease in a high rent area of town. My business has been horribly affected by the economy and never had a good chance to get off the ground. Needless to say, I am completely out of cash and credit - I have exhausted all available resources. I will be unable to pay the upcoming month's rent.

    I have a bunch of questions (one's I probably should have asked in the beginning rather the end) but will only ask a few:

    Will I be personally liable for any judgement against me if the Landlord takes this to court? The lease was signed as such: Tenant _____________(my name) d/b/a _____________ (my LLC's name). This was on the first page and the signature page. I did not personally guarantee the lease - or does the way I signed the lease imply that I did?

    When do I notify my landlord that I am having difficulties and will not be making this months rent? I realize that speaking to the landlord before I bail will be in my best interest, but when do I do it? I am friendly with the landlord and have actually done business with him; I feel horrible about the situation and realize that he is running a business too. I honestly have no other option.

    While talking with the landlord, is it reasonable that I ask him to terminate my lease and keep my deposit? The only thing I have to offer him is the security deposit. I want to avoid court and a judgement at all costs, but I don't have much to negotiate with? Will telling him I'm filing bankrupcy change his views on pursuing a judgement?

    I am at a very low point and have been successful in everything I've ever done. This is the last thing I wanted to happen - but it's time to call it quits. My situation is very embarrassing and has cost me a ton of money.

    The space is in an A+, very desirable location and should re-lease in 4-6 months.

    Please save the "You should have had a better business plan" and the "You signed the contract and you knew what you were getting in to" comments.
    I am looking for real life, practical answers and advice.

    Any and all help is greatly appreciated. Thank you in advance for your advice.What is the name of your state (only U.S. law)?
  2. #2
    Zigner is offline Senior Member
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    You will be responsible AT LEAST until it's re-rented. And yes, you DID agree to be personally liable for the amount due.
  3. #3
    ecmst12 is offline Senior Member
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    Is the lease in your personal name or business name? Is your business set up as an LLC or similar? Is your company declaring bankruptcy?
  4. #4
    Cabinet1 is offline Junior Member
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    I guess that's what I'm not sure of (Is the lease in your personal or business name?).

    I signed the lease _________________(my name) d/b/a _________________ (my LLC).

    I'm assuming that I am personally liable, but I'm not sure because it seems to me the lease is in my LLC's name. But I'm not sure?

    I could declare the LLC bankrupt if I need to. I have no plans to continue the business.
  5. #5
    Cabinet1 is offline Junior Member
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    Tom -
    Great comments and advice. Thank you.

    That was what I was thinking about the whole point of the LLC. Why would I be personally liable for the lease if I have an LLC and the LLC is on the lease? The point is for personal protection. It just scares me that my personal name shows up on the lease.

    I am holding out until the end of next week before I start taking my belonging from the space. There is a slim chance a few deals may come thru to get me by for the month. At the end of next week, if nothing has changed, is when I'll make the call to the LL to discuss my situation. I don't think I should "warm" him about my financial situation - I guess it wouldn't really matter though?

    Really at the end of the day, it doesn't really matter if the LLC or I am personally liable b/c I can't do anything about either one. I'm just curious to know my fate!

    I should probably consult an attorney to get some professional advice. I hear there are a few firms that will give you a free 30 minute consult. I'm sure 30 minutes is all I'll need.
  6. #6
    ecmst12 is offline Senior Member
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    If the debt is in the business name, then business bankruptcy could (should) provide some protection. I don't know much about it but definitely talk to a business bankruptcy lawyer before you get locked out for non payment.
  7. #7
    Cabinet1 is offline Junior Member
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    Unfortunately the debt is in my personal name. I can handle that and should be able to repay it over a long period of time - I'm just worried about a large judgement from the LL.

    No plans to get locked out. I will definately make sure I have everything out before that happens.

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