I'm being evicted from a commercial space. How can I avoid paying the balance of the lease term?
We assumed a lease at a shop and, in light of the current economy, our sales have dropped. I am behind on rent and I'm being evicted. The owners are pursuing the balance of the lease term (three years). I tried to settle outside of court but they will not budge. What should I do?Unfortunately, commercial leases are very hard to get out of--much more so than residential leases.
If the lease is with your company alone (that is, a corporation or LLC), and you have no personal obligation to pay the rent once you've vacated the space, you may be able to convince the landlord (even at the "courthouse steps") that trying to pursue a lawsuit and judgment against the company will be like trying to squeeze blood from a stone: If there's no money in the company, there's nothing for the landlord to collect.
However, if you signed a personal guarantee, your personal assets are on the line. Depending on how your lease is worded, filing for bankruptcy may or may not get you off the hook. But your personal credit could be adversely affected
Best bet is to consult with an attorney who understands both real estate law AND bankruptcy law, so you can explore all the options.
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.