Lease termination

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Lease termination

A husband and wife who are both officers of an S-Corp signed a commercial lease together as officers of the corporation only and not personally. The two later decided to get a divorce. The husband who is the majority share holder and president decided it is in the best interest of the corporation to terminate the lease, but the wife will not agree sign the termination agreement.
Can the husband terminate the wife from the corporation/company and therefore her signature will no longer be required on the termination agreement?

Asked on March 6, 2018 under Real Estate Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If they signed as officers, not personally, then the corporation, not the husband and/or wife, is the renter. In that case, since the majority owner (the husband) has the power to make decisions for the corporation (majority rules in terms of corporate authority/power), he can terminate the lease regardless of what the minority owner (the wife wants). He can do this without removing her from the company since he can make decisions for the company; if he wants, he can also terminate her employment with the company but cannot take away her ownership interest (she will remain a minority owner, but one without any managerial, etc. authority).


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