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Jane T (LLC)
Jane T (LLC), Attorney
Category: Business Law
Satisfied Customers: 8435
Experience:  Worked in corporation's law department; business formations, formalities, and other business matters
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we have a small LLC business with a five year lease. We have

Customer Question

we have a small LLC business with a five year lease. We have been in the lease for a year and 2 mos. Our lease payment if 5,000/mo. Our business is failing because of the high overhead slowdown in revenue. If we move our business, break our lease, what can the landowner do to the LLC?
Submitted: 8 years ago.
Category: Business Law
Expert:  Jane T (LLC) replied 8 years ago.

Dear DebColeman,

 

A lease is a contract and terminating a lease early (unless the lease itself provides a way to do that and such terms are followed) creates a breach of contract. If the lease itself does not specify the actions a landlord may take when a tenant breaches the lease the landlord may normally (it will vary by state) seek to obtain from the tenant the damages suffered, such as the rent due throughout the entire lease term and any other costs suffered due to the breach. Normally a landlord is expected to "mitigate" (or decrease their losses), such as throught trying to find a new tenant or perform other reasonable actions to decrease their damages, but, given the current economy, if they do perform reasonable mitigation steps any costs they do suffer (which may mean any loss in rent if they can only find a new tenant by sharply reducing the rent or if they find no one) up to and including the full payment of terms up to the expected 5 years may be sought through court action.

Also, if the lease/contract itself specified other damages due that may also allow the other party to try to seek those damages and, if any personal guarantees or if the lease was signed in the name of the owners as persons not as business owners, that may also allow personal action against the owners.

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