Why should my real estate attorney review my commercial lease? (1) You might want to ask for more favorable terms, (2) you might want to have your attorney explain what you are getting yourself into, and (3) your attorney might notice a small mistake that you are about to make that will eventually cost you big bucks. This is a story about a business owner who should have hired a business attorney, real estate attorney, and eventually a bankruptcy attorney.
A business owner negotiated with the landlord of an office building for office space. This business owner knew that he should organize his business into an entity like an LLC or corporation to protect his family assets from the liabilities of the business. The business owner signed the lease in the name of his sole proprietorship instead of forming his LLC or corporation first. Later the business owner formed his LLC in a completely different name than the name he used to sign his commercial lease. The business owner discovered that starting a new business requires blood, sweat, and tears but couldn’t handle the stress so he quit operating his business. The business owner emailed the landlord, dropped off the keys, and moved out of the office building. The landlord sued the business owner individually instead of suing the newly formed business entity. The Judge awarded the landlord $200,000.00 against the business owner individually for lost rent for the remaining months on the lease. The Judge reasoned that the business owner was individually liable and not the entity because the entity was not a party to the lease. Curtis v. AGF Spring Creek/Coit II, Ltd., 410 S.W.3d 511 (Tex. App. – Dallas 2013, no pet).
The moral of this story is that the business owner should have contacted Marquardt Law Firm, P.C. to organize the business as an entity and to review the lease before the lease was signed. Call us at 210-530-4278, 512-766-3782, or 575-430-2353 to schedule a free 60 minute personal consultation.
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