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Alex Esquire
Alex Esquire, Attorney at Law
Category: Real Estate Law
Satisfied Customers: 16558
Experience:  Experienced Licensed Attorney / Real Estate Law Mentor
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I am being sued due rent, 2 years ago i bought a Franchise.

Customer Question

i am being sued for past due rent, 2 years ago i bought a Franchise. the franchise was currenlty leaseing a space. there was 2 years left on the lease when i took over the franchise. the landlord nor the franchise owner made me sign a new lease or a sublease agreement. i was paying rent for 13 our of the 24 months, i fell behind due to finincial reasons. what are my legal rights in this matter
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Alex Esquire replied 1 year ago.

Hello. My name is***** will be happy to answer your question.

I am sorry to hear about this unfortunate situation
Are you being sued personally for the delinquent lease?

Was this franchise a corporation or an LLC?

Please provide me with more details about the situation.

Customer: replied 1 year ago.
personally along with the Franchise owner.LLC
Expert:  Alex Esquire replied 1 year ago.

Thank you for your follow up.

When you purchased this franchise, did you purchase the franchise along with an existing LLC for the franchise or did you create your own LLC?

Did you sign any personal guarantees for the business?

Customer: replied 1 year ago.
I created my personal LLCPersonal Quarantees? please explain
Expert:  Alex Esquire replied 1 year ago.

Thank you for your follow up.

When you purchase this franchise, did you agree to assume all of the debts and liabilities of the existing Franchise along with the lease?

Customer: replied 1 year ago.
debts and liabilities of the existing Franchise yes, I will need to relook at the Franchise agreement again. looks like the only thing i can find in the Franchise agreement, is where it talks about not sublet the space for any other purpose.
Customer: replied 1 year ago.
1. the purchase asset: the asset to be purchased by buyer and sold by seller are all of the rights and assets of seller, whether real, personal, tangible, or intangible, which are soley used or usable in, or relate to, seller's ownership and operation of the seller's buisness, other than the Excluded assets, as defined in section 2 below, including but not limited to the following
Customer: replied 1 year ago.
a. the real property lease, as listed below
i. village square- address
b. the furnishings, fixtures, equipment , computers, software, signs, leasehold improvements and other personal property used in Seller's buisnessand a few more about inventory
Customer: replied 1 year ago.
i did find a blurb in the Purchase agreement stating;
Assumptions/Condition precedent to closeing:
Buyer will assume current lease terms or negotiate similar lease terms on leased premises and will provide a lease assumption and waiver/realease to seller if possible
Expert:  Alex Esquire replied 1 year ago.

Thank you for your follow up.

While I would encourage you to consult with a local business attorney to have all of the documents reviewed and the entire case evaluated, unfortunately, generally, when a person purchases a franchise business and assumes liability for all the debts and liabilities, the the new owner would be liable for such liabilities which would include any money owed under the lease.

Generally, the best option would be to consult with a local business attorney and have this attorney help negotiate some type of mutually acceptable settlement, so the issue can be resolved once and for all.

I wish you the best of luck

Customer: replied 1 year ago.
thank you
Expert:  Alex Esquire replied 1 year ago.

Please let me know if you have any related follow up questions?

Thank you.

Customer: replied 1 year ago.
i do have another, can i loose my home in this case, i am all for paying any debt i owe. but would prefer not to loose my home, and have my family suffer for my mistakes
Expert:  Alex Esquire replied 1 year ago.

Thank you for your follow up.

How much are you being sued for and what is the market value of your home?

Customer: replied 1 year ago.
Sued for 73K plus feeshome value 220k
Expert:  Alex Esquire replied 1 year ago.

Thank you for your follow up.

Unfortunately, that is a serious situation that would need to be addressed and resolved, since if the landlord win, he would obtain a judgment and can in fact place a lien on the house or seize personal property, such as cars / boats and can garnish wages / bank accounts, until the judgment amount is paid off.

I wish you the best of luck!

Expert:  Alex Esquire replied 1 year ago.

Please let me know if you have any related follow up questions?

Thank you.

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