Basic Training: I is for I Gotta Get Outta This Lease

Posted on September 23, 2019 in Business Transactions

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This week’s basic training deals with a situation becoming all too common these days: Business stinks, and you just want out. To close the door, turn the keys over to the landlord and just walk away.

Q.: How can I give keys back to landlord, and for them not to sue me? Small shop in a shopping center. Rent is all paid and there is no good-guy clause?

A.: Dear Out: Unless the lease permits your company to vacate the premises at any time (which I doubt), it’s on the hook for the lease payments until the lease runs out. If you signed a personal guaranty, you’ll be on the hook personally, as well. Such is the way of commercial leases.

You can try negotiating with the landlord (if the company is virtually out of business and you have no assets, it may not be worth the landlord’s time/expense to pay the attorney’s fees to start a lawsuit). You could also consider finding another tenant to take the space (although the landlord would have to approve of the swap) or filing for bankruptcy protection. To be clear about all your options, I’d recommend that you consult with a business attorney in your area who can review your lease and speak to your specific situation and options under local law.

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