More details to this question:
My parents co singed on a lease for a restaurant. They ended up not being part of the business and took their names off everything except for the lease. The owners lost their business and filed chapter 7. Now they are coming after them for 170,000. They had nothing to do with the business just made a huge mistake of not getting their name offs. What can I do?
2 ANSWERS
Business Transactions Attorney serving Los Angeles, CA
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Doland & Fraade
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Your parents have a very difficult situation without a simple solution. It may require them to consult a bankruptcy attorney so they can save the maximum amount permitted under State or Federal law. They may wish to see if there were any technicalities which would render their guaranty of no value. Remember also that the landlord has a duty to "mitigate damages" by re-leasing as soon as possible.
Answered on Jan 08th, 2013 at 12:12 PM
Real Estate Attorney serving San Jose, CA
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Priest Law Offices
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In general, when individuals sign a Lease Guaranty, they are promising the Landlord that they will pay all rents and obligations under the Lease if the Tenants fail to do so. That promise remains binding on those who guaranteed the obligations even if the Tenants go out of business or file bankruptcy; it is the Landlord's incentive to take the risks involved in entering into to the Lease. Your parents must settle with the Landlord, and will likely need the assistance of a lawyer; the Landlord has the right to sue for its losses, and can usually win damages and legal costs.
Answered on Dec 31st, 2012 at 9:02 AM