Legal Question in Business Law in Oregon

S-Corp Breaking Lease

My spouse and I started a small retail business at a small tourist mall in Oregon. We signed a lease for 3 years. We closed our business and moved out of state in January 2007, and have been making the lease payments out of our own pocket in good faith.

The S-Corp is not in business, but is still an active S-Corp. We can't afford the payments anymore, if we end up breaking the lease, what ar the legal reprecautions that may be taken? The S-Corp really has no assets to speak of as they were liquidated (sold or given away) when we moved.


Asked on 6/20/07, 11:22 pm

2 Answers from Attorneys
Adam Breeden Breeden & Herbe, Ltd.

Re: S-Corp Breaking Lease

It sounds like your case would need an Oregon attorney if it went to Court, but the crucial question is HOW you signed the lease. Most lessors will require you to sign as the business and personally. If you signed personally then your personal assets can be pursued to satisfy the lease payments. If only the S-Corp signed the lease (in other words you signed but only in your capacity as President of the S-Corp.) then the only remedies are against the S-Corp. Assuming there are no assets as you said, this means the lessor has a good claim against a corporation with no money and it's probably not worth pursuing.

There is another theory called "piercing the corporate veil" that the lessor could try to use to get to your personal assets. However, if it came to that, you would be best served by retaining an attorney for further assistance.

Please contact my firm if we can be of assistance.

Read more
Answered on 6/21/07, 12:32 pm
Johm Smith tom's

Re: S-Corp Breaking Lease

If you didn't personally guarantee the lease, terminate the company and you're done. Otherwise see an attorney for the state where the lease is in effect. Our NV member can assist you or we can add an OR member also.

Read more
Answered on 6/21/07, 12:16 am


Related Questions & Answers

More Business Law questions and answers in Oregon