Q: I have a question regarding a lease agreement. This agreement is for a property in Allen, TX.
There are three partners (LLC) and a rift has developed between them. Two partners wanted to buy out the third (P3) but have first given P3 the opportunity to buy them out.
All three partners, along with their spouses, were required to sign to be individually responsible for the entire term of the lease in order to secure the space they wanted.
P3 has told the other two partners that a lawyer informed them that they can send a letter to the landlord stating that P3 is solely responsible for the lease, going forward, and that they will no longer be on the hook for any future rents.
This makes no sense to me as the landlord has a legally binding agreement in which six individuals have agreed to be responsible for the terms of the lease. It seems to me that the only way they could be relieved of the responsibility would be if the landlord released them from said responsibility.
Am I crazy or is the lawyer P3 consulted, assuming P3 consulted a lawyer at all, incompetent?
A:
It depends on the language of the Lease and of the Guaranties signed by the individual members.
It is not uncommon for a landlord to require each individual member of an LLC to personally guaranty a lease to the LLC if the LLC does not have established credit. Some leases provide that new members who join the LLC after the lease was signed must sign a new personal guaranty, and allow departing members who leave an LLC after the lease was signed to be removed from future obligations under their personal guaranty.
Read your Lease and Guaranties. If they aren't clear on this point or you don't understand them, take them to lawyer hired by you for help in understanding them.
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