What to do if I’m in a 1 year lease and the business is not generating enough income to pay for expenses?

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What to do if I’m in a 1 year lease and the business is not generating enough income to pay for expenses?

Right away in the first week I asked management about a grace period to break lease but he said there wasn’t one. It took 2 months for him to give me my contract and in the contract I believe it says that I have a 1 month grace period. I have also been telling the manager to fix a light thats out, it’s about to be a month and he hasn’t done anything yet.

Asked on December 4, 2012 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

It doesn't matter, from a legal persective, whether the business can afford the rent or not: it--or you; see below--are  still obligated to the lease. If  the lease gives you a grace period, you are entitled to it: you are  entitled to whatever rights the lease gives  you, but no others.

A light that is out would almost certainly not affect your obligations: only factors that render the premises unfit for their intended purpose would affect the tenant's obligations, and a light that's out almost certainly does not rise to that level.

If the business is a corporation ("inc.") or limited liability company ("LLC") and the business, not you, is the tenant and you signed the lease only in your capacity as a managing member or officer of the company, then--as long as  you did not also give a personal guaranty--only the business is liable under the lease. One option is to simply shut the business down in that case.

However, if the business was a sole proprietorship, or you signed the lease in your personal capacity, or you gave the landlord a personal guaranty, then you could be held personally liable for all the rent due under the lease.


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