Legal Question in Business Law in California

1. Can he come after our other businesses that fall under the same corporation?

Answer -- if the corporation is a party to the lease, then yes, he can sue the corporation, and to the extent the corporation has assets, however derived (e.g., from business operations separate and apart from the business operations that were conducted in the leased space), he can get to those assets to satisfy the judgment.

2. And how can we protect our house from a legal judgment?

Answer -- as a personal guarantor on the lease, you would be sued individually by the landlord for unpaid rent. Assuming he obtains a judgment against you, yes, he could file an "abstract of judgment" and put a lien on your house. If you ever were to sell your house, or try to refinance your house, that lien would have to be paid off by sale proceeds, or the proceeds of a refinance. No lender would refinance until it was paid off.

3. If we put the house in an irrevocable trust for the children, will that protect it and can we still sell it if we want to?

Answer: good question. The answer is maybe, but as one of the lawyers responded on your other question, transferring an asset in anticipation of a judgment could be overturned as a fraudulent transfer. When you transfer something to an "irrevocable" trust, you no longer own it, so be careful.

Hope that helps.

Without knowing about your personal finances (including corporate holdings), I cannot say definitively that personal bankruptcy might be an option if there is a lawsuit. That would protect your personal assets and might be considered. As far as the corporation goes, my colleague is correct.

My friend, I beg to differ; I think you are misunderstanding the answers. My answer did not assume that you had vacated the premises. However, unless and until you vacate the premises, you will not be entitled to a limitation on the landlord's right to collect damages due to failing to mitigate -- the landlord cannot begin to mitigate while the former tenant or soon-to-be former tenant is still in possession. If you remain in possession without paying rent, you will be liable for the rent. Further, the fact that you have had the business for sale without a buyer is immaterial. As long as you are on the premises, you accrue rent liability.

Perhaps you need to face reality. The reality seems to be that your business cannot be sold. You are obligated to pay rent because you are still occupying the building. The landlord would have to begin mitigation efforts when the building was empty. Your personal guarantee leaves all your other assets in jeopardy.

You need to get professional advice as soon as possible, and maybe Chapter 13 will be your best choice. Treating the advice you got as "misunderstanding the question" suggests to me that you are not ready to face the truth. Your business has failed. I don't understand why the landlord hasn't evicted you yet, but it could be that he'd rather build up his claim against your other assets under the personal guarantee than evict and mitigate damages by re-renting.

Take my advice and show it to some other lawyer with whom you can sit down in person and have a debate. See if the other lawyer agrees. You need to take quick and smart steps to avoid a personal and family financial disaster. Write to me directly if you wish.