Ask Entrepreneur

When a partner resigns from an LLC, what can that partner do to remove liability from the lease?

I started an LLC in the state of Arizona with two partners. After a year in business I am choosing to take another path and I am attempting to separate my legal liabilities. We initially signed a three-year lease with personal guarantees and currently have 23 months remaining. I am trying to figure out the route to take in order to bring a convincing argument to the property manager/owner to be removed of liability.
Good luck. In this real estate market, landlords will want to keep as many deep pockets as they can find on the lease. The landlord is not obligated to release you from the lease, because your agreement to be responsible for the LLC's lease debt was not contingent on whether you remained with the company or not.

Your first step is to find an attorney in your area to advise you. Next, inform the landlord that you will be leaving the business and request to be removed from the personal guaranty. If the landlord says yes, you'll want the attorney to help draft the necessary amendments to the lease/guaranty.

If the landlord says no, you'll want the attorney to draft a document whereby the remaining partners agree to indemnify you if the business defaults on the lease and the landlord comes after you. Make sure you do this as part of a coordinated exit plan with your partners.

Share Your Thoughts

Today's Editor's Picks

About ASK ENTREPRENEUR

Ask Entrepreneur is a question-and-answer forum for and by the Entrepreneur.com community. Send in your burning business question, or comment on someone else's now. Have a Question? Ask Now

Topics (over 1000+ answers)

Ask Entrepreneur Q&A Hangouts

Google + Hangout With Shark Tank
Google + Hangout With Jason Falls
Google + Hangout With Angela Jia Kim
Google + Hangout With Grant Cardone

ASK Quick Tips