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Good morning. First, on the personal guaranty on the lease....even though you may have personally guaranteed the lease, neither you nor the LLC is going to have any liability for the lease because your landlord...whether it be the original owner or the bank after foreclosure....has not performed due to you having no CO and thus is in default. That gives the LLC the right to terminate. Second, whether you are entitled to any financial recovery is going to depend upon whether the LLC has any value as it stands now. If not, no matter what you may have invested, since there is no operating agreement, you would simply be entitled to 50% of whatever the LLC is worth. If it has hard assets, you would value those and be entitled to 50%. But, since your partner wants to continue, you may have some leverage for him to be willing to pay you to leave. Third, the only personal liability you have here is the guarantee of the lease since the LLC is a limited liability entity. Though the landlord is in default, it's always best to avoid lawsuits, so if you can get a release from your partner and, more importantly from the bank, from any obligation on the lease; and since the value of your interest is probably minimal, if you can walk away with no worries about the lease going forward, that would, in my view, likely be your best path to pursue.
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Okay, then a quick followup. My sense is that if the partner renegotiates the lease for a lower rate and then continues to operate, she will be operating with the assets that I paid half the money for. Plus I am responsible for a number of the clients we have.
Actually the validity of that lease makes all the difference in my approach to this. If the lease is not valid then it's like saying we have no financial obligation other than our monthly expenses. In that case there is some cash and other hard assets that I would want to have 50% of. I have to get some answers on that lease situation.
I will be happy to address any particular issues you have with your lease.
In actuality we cannot really move forward with getting a CO because the property has to be converted from residential and commercial. There's a whole slew of things that have to be done that involve the owner of the property and as of now there is no "owner". We are trapped in a gray area. My partner is probably not going to agree to getting out of the lease as it stands now because then the bank may give us a 30 day notice to vacate. The partner desperately wants to hold onto the space and she seems to want to wait out the process until she gets a new lease because even if it were valid, we violated the terms by not paying.
I know this is annoying and after this response, I'll let you go.
You are correct. The space has to be a commercially viable space in order for it to be leased as a commercial space. That means that someone (bank or new owner) would have to agree to make the changes for the conversion. The building is located in prime property near downtown. The property adjacent to us was just sold to builders constructing new expensive townhouses. This all may be a moot issue.
Okay I will let you know but I don't see a way to rate your helpful response on this very complicated matter.
Thank you so much for the positive rating! I appreciate having had the opportunity to serveyou! If I can be of assistance to you inthe future, just look me up and I will be happy to help!
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