Legal Question in Real Estate Law in California
landlord sue previous tenants (commercial lease)
To whom it may concern:
I'm not sure if this case belongs to the Real Estate Law or Business Law.
This is regarding a storefront business, the business has changed hands many times.
I'm one of the owner during these times.
The landlord is currently suing all the previous owners for the defaults on the current owner for not paying the rent, so here are my questions on how to handle this situation:
(1) Can the landlord go after all the previous owners, and on what grounds...??
(2) If only 3 out of 5 previous owners can be contacted, the other 2 moved away or is out of country, Does that mean the other 2 can get away with the lawsuit...??
(3) My business was a Corporation entity, and the corporation was closed years ago, so can the landlord still go after me personally
or not ...??
(4) We feel it's not right for the landlord to go after previous owners, the landlord should take his own responsibility for granting the lease to the current owner.
What is the best way to handle this case for all the previous owners...??
Please reply as precise as possible, we are in the Los Angeles area, if you can provide the most helpful answers, then we will choose you to represent us, thank you very much.
1 Answer from Attorneys
Re: landlord sue previous tenants (commercial lease)
You ask to be as "precise as possible," but unfortunately your questions do not lend themselves to exact answers. To question #3, if only your corporation signed the lease and you were not required to sign a guaranty agreement, your personal assets "should" be protected. However, the landlord may attempt to sue you personally by claiming that you failed to follow the formailities of a corporation (e.g. failed to properly incorporate, hold annual meetings, take written minutes of board meetings, etc.) or commingled personal and corporate funds. It's called the "alter ego" theory or "piercing the corporate veil."
As for your other questions, it sounds that you and the 4 other "owners" all occupied the space under a single lease, with each new owner/tenant taking possession as a assignee of the original lease. In most commercial lease assignment, the prior tenants, as assignors, remain liable for subsequent tenants' default. If that lease has been extended or renewed subsequent to your assignment, you may be cut off from further responsibility.
As for the missing tenants, the original landlord could decide it is not worth trying to pursue them, especially if he can be made whole bythe original or any of the prior tenants.
My recommendation is that you find a local real estate attorney. Take copies of all documents that you signed with the landlord. The questions above about a personal guaranty and responsibility as assignor of the lease can be answered upon his/her review.
Good luck.
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