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Richard, Attorney
Category: Business Law
Satisfied Customers: 53705
Experience:  32 years of experience practicing law and a businessman.
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My family and I are going in the restauraunt business together.

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My family and I are going in the restauraunt business together. We will doing a lease with an option to buy for future. The lease is a hefty 10,000 per month and the commitment will be for 5 years. We want to know based on the lease if default occurs it states that both lessee and landlord can come to an agreement or a mitigation on remainder of lease. Also if bankruptcy occurs we can immediately terminate the lease; however would not change default info above.
My question is if we put under an LLC or whatever we need to do; is there anything that will protect us from paying that money back if we flop. Please help. We are signing lease in the next couple of days and need some answers. Thank You Candice
Good morning Candice....Let me see if I can help you.

First, if you form an LLC - which I recommend that you do because you should be operating a restaurant business from a limited liability entity to protect your personal assets from any liability your business incurs - only the LLC would be responsible for the remaining lease payments in the event of a default. Be prepared, however, for the landlord to ask for a personal guaranty of the lease should you form an LLC.   Even so, you should still form an LLC because it will shield your personal assets from other business liabilities, such as other creditors or lawsuits, etc.

Second, a landlord has a duty to mitigage his damages.   Mitigation means that once you have vacated or given notice that you are vacating, the landlord is obligated to try to re-lease the space and once leased to a new tenant, you would then be released from any further obligations with respect to future lease payments.   

I hope this has given you the guidance you were seeking. I wish you the best of luck!

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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.
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