What happens if a spouse signs personally for a commercial lease?

We are a start-up company with a small on-line business and are looking to lease a storefront under our LLC. We do not have much of a financial history but what we have is good. The landlord wants our spouses to sign the lease, as well as myself and partner. Do our spouses have to sign and I understand if they do, then they are liable for the lease, as well as our company? Could they’re wages be garnered in a lawsuit?

Asked on August 22, 2011 Missouri

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

What your possible landlord wants is a personal guarantee by you, your business partner and your respective spouses for the rented property in addition to a representative signing the proposed lease for your limited liability company.

The rationale is that you can always bankrupt the limited liability company if business takes a turn for the worse, but it will be harder to have individuals do a personal bankrupcty to avoid an obligation on the lease.

Your spouses do not have to sign the proposed lease asa guarantor. If they sign the proposed lease and payments under it are not made, the landlord can sue all people who signed the lease in their capactity for signing the document as well as the limited liability company which would be the main tenant.

In the event of a successful lawsuit by the landlord resulting in a judgment against all who signed the lease, wage garnishment and bank levies could result for its collection against the individual signers.

I recommend that you consult with a busienss attorney before you sign the lease you have written about. Personally, I would not have any of the spouses sign the proposed lease as requested.

Good luck.


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