If my husband signed a 5 year lease on a bar that we own together without my consent, is it valid?

My husband and I own a bar together and for the past 2 years I have been running it, essentially by myself. My husband was not around much. About 9 months ago, he forced me to go to alcohol rehab which I have since completed and been sober since. While in rehab, he leased the bar out on a 5 year lease without my consent. I didn’t sign any paperwork nor did I agree to any such thing. Is this legal? Is this a binding contract? If so, how is that possible without my consent? At the end of the 5 years, do we have to renew the lease or can I take my bar back? We have several small businesses, however the bar is set up under a corporation that his name is not on. The corporation then rents the land from our LLC, which his name is on. This is how I understand it but I’m not incredibly savvy with this either so I can’t say with 100% certainty this is exactly how the bar is set up. I hope you can give me some insight, I know that’s a tall order without specific exact details.

Asked on September 20, 2017 under Business Law, Iowa

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Forget about whether he is your husband: that is irrelevant for this purpose. All that matters is whether he had the authority, as an officer or manager of the bar's business, to enter into the lease. If he was someone who would normally have the authority to do this--a VP, a president, a general manager, etc.--then the lease is legal: when a person who by dint of his position has the authority to execute a contract or lease does so, the lease is valid. If he was not a suffiicently senior officer of the bar corporation, he could not do this, however; whether he has a role or authority in the LLC from which the bar corporation itself leases land does not give him the right to lease out the bar, any more than a residential landlord can lease out a tenant's apartment to someone else while the lease is in effect without the tenant's consent. So the issue is, did he have a role in the bar's corporation sufficient to give him the authority to the outside world (i.e. someone of his position would typically be seen as having the authority) to enter into the lease?


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