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Lucy, Esq.
Lucy, Esq., Attorney
Category: Business Law
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Experience:  Attorney
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I was sold on a business idea, so I invested in this persons

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I was sold on a business idea, so I invested in this person's business. We found a retail storefront, the agreement was I would pay the security deposit and first 2 months rent until income started, and the buisness owner would provide the products. The business name, the business owner and my name is XXXXX XXXXX lease. I am the guarantor on the 3 year lease.

Turns out the startup costs are much more than I was told, and the business wants me to fund 100% of it, which was not what was agreed. I found out this person has zero funds and there were other lies told. So we have an empty store unless I put out more money. Basically I want out because I believe this person is a con artist, and I will never see any of my investment back. Do I have any options in getting my money back from the business owner? Is it possible that the landlord relieves me of the lease?
Submitted: 4 years ago.
Category: Business Law
Expert:  Lucy, Esq. replied 4 years ago.

My name is XXXXX XXXXX I'd be happy to answer your questions today.

As between you and the landlord, unfortunately, the lease is binding. The landlord didn't do anything wrong, so he can hold you to the terms of the lease. Unfortunately, that means that, if you break the lease, he can choose to sue either you or the business owner - and he's going to sue whichever one of you he thinks is more likely to pay. What you can do is see if he'll agree to a sublease, if you can get the other owner to agree. That way, you can avoid further liability under the lease.

As far as the business goes, well, if you agreed to invest a specified amount, you have no obligation to pay any more than that amount. If you agreed to fund all startup costs, then you are obligated even if they're more than you anticipated. The unfortunate problem with an investment is that returns are not guaranteed. There's no automatic right to get a return on your investment or to even get the initial money back. What you can do, if the investment was based on lies, is file suit against the partner, claiming that your investment was based on his misrepresentation and fraud.

If, as a result of the other owner's fraud and misrepresentation, you end up spending additional monies on the lease, then you can also sue him for a reimbursement of any amounts paid, because those are also damages that you incurred as a result of his fraud.

Good luck.
Lucy, Esq. and 2 other Business Law Specialists are ready to help you
Customer: replied 4 years ago.

The landlord will agree to a sublease. But the business owner wants the store and has nothing to lose as the deposit and rent money paid so far is mine.


The business owner will also not pay rent. So it seems the landlord will chase me for future rent money as the guarantor. At this point, I will take the upfront loss of rent and deposit.


If the landlord doesn't allow us to cancel the lease, is there anyway I can have the lease on my own or have her take the lease fully? As guarantor, do I have extra leverage to remove her from the lease?

Expert:  Lucy, Esq. replied 4 years ago.
Unfortunately, you don't have any additional leverage. You're both liable on the lease, so unless the other owner will agree, you may have to go to court. If you're getting a judgment that this was fraud, then the judge can also order the owner to agree to a sub-lease or assignment of the lease, or to take you off of it.

If the other owner won't agree, the only way to force the issue is to take him to court.

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