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Question added to topic Legal Basics For StartupsJanuary 24, 2009

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.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

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