Legal Question in Business Law in Ohio

Breach of Commercial Lease...

My husband opened a martial arts school and signed a 3 year commercial lease. After 1 year of the business, we had to close down the business because all expenses and overhead cost were beyond the income we brought in. We tried to continue to operate the business and took cash loans from families to keep up with the all business expenses and monthly lease. About 7 months ago, my husband had to leave the business and took an employment overseas as a security contractor so we can make ends meet. We are in a lot of debt and now we are also stuck with the commercial lease payment. He continued to pay the mthly lease for last 7 mths. However, recently, he informed the landlord (via email) that he could no longer afford to pay the lease. There are not much assets other than a small office, old furniture and martial arts item such as floor mats, boxing gloves, etc. Recently, he had movers move out everything and empty the space as of 28 Feb 09 and informed the landlord that he no longer occupies the space. He also had a LLC formed to protect personal assets. He does not intent to pay march 09 lease pymt since we could not afford it anymore. What will happen to us now?


Asked on 3/08/09, 6:11 pm

3 Answers from Attorneys
David Weilbacher, Esq. Attorney at Law

Re: Breach of Commercial Lease...

When he signed the lease did he sign only in his capacity as a member of the LLC, or did he provide a personal guarantee? A personal guarantee is very common, so you need to review the lease and any other documents that were signed with the landlord. If only the LLC is on the lease, the landlord can sue the LLC for the rent. If there is a personal guarantee, the landlord can sue both the LLC and your husband for the rent. If you have not dissolved the LLC, do not due so. If you dissolve the LLC, and you do not put any creditors on notice prior to doing so, the creditors could pursue you personally even if there was not a personal guarantee, if there were any assets distributed to you from the LLC; such as the martial arts equipment.

Disclaimer: I am not offering legal advice. I am just making suggestions for starting points for when you do speak with an attorney. Do NOT rely on anything I write and contact a lawyer.

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Answered on 3/08/09, 6:32 pm
David Weilbacher, Esq. Attorney at Law

Re: Breach of Commercial Lease...

When he signed the lease did he sign only in his capacity as a member of the LLC, or did he provide a personal guarantee? A personal guarantee is very common, so you need to review the lease and any other documents that were signed with the landlord. If only the LLC is on the lease, the landlord can sue the LLC for the rent. If there is a personal guarantee, the landlord can sue both the LLC and your husband for the rent. If you have not dissolved the LLC, do not due so. If you dissolve the LLC, and you do not put any creditors on notice prior to doing so, the creditors could pursue you personally even if there was not a personal guarantee, if there were any assets distributed to you from the LLC; such as the martial arts equipment.

Disclaimer: I am not offering legal advice. I am just making suggestions for starting points for when you do speak with an attorney. Do NOT rely on anything I write and contact a lawyer.

Read more
Answered on 3/08/09, 6:33 pm
Joseph Jacobs Jacobs & Lowder

Re: Breach of Commercial Lease...

The LLC is on the hook for the remainder of the lease, except that the landlord has some obligation to mitigate his damages by offering it for rent to others....You need to make sure he signed the lease as owner of the LLC....i dont mind looking at any paperwork you may want to forward to get a better answer...and you can call me directly if you want.....216.952.1990....He also had to have treated the LLC like a business, respecting the divisions between personal and business expenses, keeping records....if he followed thru on that end, the landlord probably wont be able to get thru to his personal assets...that's the whole purpose of a Limited Liability Company.

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Answered on 3/08/09, 6:49 pm


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