Q: My LLC signed lease assumption (NC). Previous owner stayed as guarantor. What personal liability do i carry for lease?
I purchased the assets of a business in Wake forest NC. The owner mis represented the revenue of the business and i realized quickly that i may not be able to pay the rent. My LLC assumed the lease, with me as the acting member. Do i carry any personal liability if my LLC is unable to fulfill the obligations of the lease? In what circumstances could the landlord pursue me personally(i think its called piercing the veil)? I have never co-mingled funds, and only bought the business under the understanding that it was cash flow positive(meaning I only put enough into the LLC to buy the business assets and maintain a minimum balance in my business checking account).
A: Generally, you would not be personally responsible for the debts of the LLC. Piercing the corporate veil is the way that you get behind the LLC to individual members. There are many factors that determine whether the veil can be pierced. Co-mingling is one, inadequate capitalization, failure to follow corporation formalities. In your case, it sounds as if it may be unlikely, but that does not mean that a suit couldn't be filed attempting to hold you personally liable.
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