commercial lease broken but company closing...our rights?

[mkathyf]

What is the name of your state (only U.S. law)? Ohio

We have talked with a few attorneys but want to get some more opinions. Each attorney does not have a definitive answer.

A few years ago, a person we know was looking for a new location for his business because the building he was in was being sold. At that time, he had been in business for many years.

Jointly we found a building and we agreed to purchase it ONLY if he signed a lease PRIOR to the purchase...because otherwise we would not want to purchase this building.

OK..fast forward 2 years. As I write this, he is in the process of moving out.... no notice.
Said he will pay us for April and May.....but I really doubt it.

He is closing his business under the current name and opening under a new name.

His lease was for 5 years.

Our BIGGEST mistake is that we did not have him sign a personal guarantee.

Last week we noticed his website was gone...and found several complaints against his business with the BBB and other sites.

Realistically, can we go after him for lost rents...up to the point of re-renting?
This will be a very difficult building to rent as it is very business specific and very large and isn't laid out in a way that will allow us to divide the building.

Any constructive comments are much appreciated.

 

[latigo]

What is the name of your state (only U.S. law)? Ohio

We have talked with a few attorneys but want to get some more opinions. Each attorney does not have a definitive answer.

A few years ago, a person we know was looking for a new location for his business because the building he was in was being sold. At that time, he had been in business for many years.

Jointly we found a building and we agreed to purchase it ONLY if he signed a lease PRIOR to the purchase...because otherwise we would not want to purchase this building.

OK..fast forward 2 years. As I write this, he is in the process of moving out.... no notice.
Said he will pay us for April and May.....but I really doubt it.

He is closing his business under the current name and opening under a new name.

His lease was for 5 years.

Our BIGGEST mistake is that we did not have him sign a personal guarantee.

Last week we noticed his web site was gone...and found several complaints against his business with the BBB and other sites.

Realistically, can we go after him for lost rents...up to the point of re-renting?
This will be a very difficult building to rent as it is very business specific and very large and isn't laid out in a way that will allow us to divide the building.

Any constructive comments are much appreciated.

Well, this may not be useful or even definitive, but it does seems pertinent.

What would be the sense in having the lessee sign the lease and in turn sign a personal guarantee?

Obviously, you aren't taking the position that without his personal guarantee you have no cause of action for breach of contract. Otherwise you wouldn't be contemplating suing the guy.

Now if you were so thoughtless as to have leased the building to a fictitious entity, like "his business", then you have another hurdle before going after the individual.

(Not to mention purchasing a building that had such limited appeal to potential occupants. And your failure to have the lessee pledge assets to guarantee his performance of the lease. And if he didn't possess sufficient assets to secure his performance, then you shouldn't have got into the deal. Something you have already concluded, but a bit too late)

Furthermore, it seems unlikely that out of the assortment of lawyers that have been consulted none would disagree that you must make reasonable efforts to re-let the building to minimize your loss of future rent occasioned by the breach of contract.

However, your responsibility to mitigate you loss DOES NOT require you to remodel the building in order to make it more attractive to a wide range of tenants. more tenantable. You may wish to do that anyway, but there is nothing in the law of landlord/tenant damages that requires it.

Lastly, you might wish to be more careful in your use of pronouns. Your post could literally be read as if the tenant (he) was also the joint purchaser (we) of the building.


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