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.
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.