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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3611
Experience:  Solicitors 2 years plus PQE
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I signed a commercial tenancy agreement on a hairdressing salon

Resolved Question:

I signed a commercial tenancy agreement on a hairdressing salon with a friend we are both on the agreement. I put up the full deposit for the agreement. Over a year ago my friend left the business to work elsewhere and I have been left to pay all of the rent despite her name being on the tenancy. Now the tenancy has expired and the landlord is informing me that my ex partner is entitled to 50% of the deposit. Am I therefore entitled to go after the other 50% of the rent that she hasnt paid despite being billed by the landlord she has just ignored them
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
Is the lease in both your names personally?
Kind regards
AJ
Customer: replied 2 years ago.

Yes

Customer: replied 2 years ago.

I understand that I stupidly put her name on the lease what I dont understand is if we are both entitled to the deposit as we are both on the lease despite the fact that I put up the deposit, why is she not entitled to have paid the last years half of the rent. When I presented this to the Co-op they responded by saying as long as the rent was paid they were not interested as to who paid it. As I was not in a position to be able to walk away and lose my deposit I have been paying the rent ever since.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Did you carry on trading at the address when she left?
Kind regards
AJ
Customer: replied 2 years ago.

Yes I did - and I have now been told that the lease expired on 5th Jan although I was not informed of this until yesterday.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
The position is as follows:
- When you signed the lease you entered into a legal partnership;
- Your contribution to that partnership was the deposit;
- When she left the partnership it was dissolved and the fact that you carried on trading means you assumed responsibility for the lease and the liabilities of the partnership;
- When the partnership was dissolved you would be entitled to be returned the capital contributions you have made - therefore you are entitled to the whole deposit - the fact that the co op will not return it to you is just a practical issue - you should write to her and demand it back as your capital in the partnership - if she does not return it then you should consider sueing her https://www.moneyclaim.gov.uk/web/mcol/welcome
In relation to the lease:
- The reason why the co op do not care who pays the rent is because you are almost certainly "jointly and severally" liable for it - this means that the co op can chase one of you or both of you for the whole debt;
- In relation to a "joint and several" liability if only one party is chased, that party is entitled to demand payment from the other person under the Civil Liability (Contribution) Act 1978;
- Technically this means you could demand she repays you for half the rent as well - the only issue is you have been trading from the site, post dissolution of your partnership - she would therefore be entitled to claim from you potentially the liabilities that you incur and take post dissolution - this may have the effect of cancelling out any claim you have for half the rent.
How much are we talking about here?
Kind regards
AJ
Customer: replied 2 years ago.

The deposit is for £9,000 - but the business is worth £35,000 my concern is I am unable to sell the business whilst she is on the lease I am told people would be concerned of having a so called silent partner. I have also been told to get her off the lease will cost me £1,500 and I would need to renew the lease and have someone stand guarantor (not sure why). The co-op are speaking with their solicitors to find out next action. If I walk away now I stand to lose half the deposit and have a fight on my hands but also with the knowledge that I could not sell the business. However if I renew the lease I will need to go the through the proceedings of getting her off the lease at my expense.

Customer: replied 2 years ago.

Please can you explain the following:-

post dissolution of your partnership - she would therefore be entitled to claim from you potentially the liabilities that you incur and take post dissolution - this may have the effect of cancelling out any claim you have for half the rent.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Any prospective buyer would be comfortable with this arrangement as long as you have proper documentation.
You just need to ensure you have a letter of resignation form her - preferably in deed form giving up all claims to the assets of the business. Secondly you could ask to confirm in writing that she will grant an assignment of the lease - or better still give you a power of attorney to assign the lease.
Ultimately she should agree to do this because you can put pressure on her by telling her she is still on the hook for half the rent.
Kind regards
AJ
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
What that sentence means is that post dissolution of the partnership she ceases to be liable for any liabilities incurred by the business once she has left. This is not binding on the co op but it is potentially binding on you as you have taken benefit of the commercial space.
Kind regards
AJ
Customer: replied 2 years ago.

If the lease renewal is not in my best intention for example they will only allow me to renew if the lease is for a minimum of three years (which I would not be interested in). And the co-op insist on dividing the deposit are there actions that I should start to perform now with regards ***** ***** my deposit and should those actions be directed at her via letters as suggested or could I deal directly with the co-op

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
I think what you need to try and do is explain to the co op that the deposit came form you personally and your bank account and therefore belongs to you. Also explain your partnership has been dissolved and this deposit belongs to you.
It would also help if the out going partner wrote to the co op and confirms that she does not have any right or interest in the deposit and it should be transferred to you.
In relation to the lease - you could negotiate and then try and sell the business before the lease is signed. Do you have a prospective buyer?
Kind regards
AJ
Customer: replied 2 years ago.

Ok can do that with regards ***** ***** co-op with regards ***** ***** with getting es partner off the lease I have been down this road already and was informed by the co-op that it would cost me £1,500 to pursue this avenue which of course she had no interest in paying. Now the lease has expired however where do we stand?

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Now the lease has expired it will turn into a rolling lease - you need to either give notice to terminate the rolling lease and give up possession or renew the lease.
Have the Co Op asked for possession of the property back?
Kind regards
AJ
Customer: replied 2 years ago.

No they have done neither I understand they are talking to their solicitors - so if I were to obtain a letter from the ex partner to say she has no interest in the lease or deposit or business I could then roll on alone, make no changes and legally be enititled to both full deposit and any monies if the business sold?

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
The deposit is definitely your property.
If you sell the assets of the of business then she may be entitled to a share of those assets on the basis that she was a resigning partner. You would need her to assign her share in all the assets of the business over to you - in return she would probably require being released from its liabilities.
Until you have a formal resignation she will still be entitled to a share in the former partnership assets.
Kind regards
AJ
Customer: replied 2 years ago.

Just to advise you this is not a limited company I am a sole trader the only name that appears on any documentation is both on the leasehold. I borrowed in my own name to get the salon up and running and there was never any contract between us.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
The problem is you entered into a partnership together - therefore when that partnership is dissolved the partners must:
- Take back the assets they contributed (in your case the deposit);
- Split any assets and liabilities equally.
She would be entitled to half the value of the assets less liabilities at the date the partnership was dissolved. The problem is you carried on trading with the assets after dissolution and have built up further value and good will in them - when you come to sell them you are potentially leaving yourself exposed to a claim from her.
I would say to her, she is on the hook still for the liabilities of the partnership, you will accept responsibility for these if she (in writing) gives up any claim to the partnership assets.
Kind regards
AJ
Customer: replied 2 years ago.

When you say liabilities are you referring to half the rent? So would my best be to try and get the co-op to release the deposit to me and walk away? Is there a technical format I could address to her to say now that the partnership is dissolved and that she is not enititled to anything to entice her off the lease and then once this has happened she wouldnt be entitled to anything in the future. Even if I have to pay the £1,500 to get her off of it.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
To get her to confirm her resignation and give her rights to the partnership, it would best to do this in a deed.
Unless the business is actually worth something and you have a buyer then walking away is a sensible option.
The liabilities would include liability for the lease but also any other trading liabilities up until the date of termination (e.g overdraft, utilities, suppliers etc)
Kind regards
AJ
Customer: replied 2 years ago.

OK prepared to walk and apologies to go full circle but If I have no joy getting the co-op to return the deposit fully back to me where do I go from there - is it best my solicitor deals with the co-op with regards ***** ***** matter am I in a position that they should legally "see" that the deposit is mine. Or should I open up communication with ex partner to just have confirm she has no interest or entitlement lease.

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
If they will only return the deposit to you and her jointly then you will have to firstly demand she returns it to you and if she does not you may have to sue her in the county court.
Kind regards
AJ
Customer: replied 2 years ago.

Sorry to be stupid but are they able to do that despite what you have stated earlier in that the deposit is clearly mine? If she were to send a letter of resignation to the co-op would that stand up as her walking away or do I need a more formal document to present to them.

Customer: replied 2 years ago.

Can you clarify what a deed means?

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
Co-Op are a third party with a joint lease over you and your partner.
If your partner writes to them and informs them to transfer the deposit to you that should be sufficient, but you cannot force the co op to do this, if they ignore the instruction then you will have to recover the other half the deposit from your ex partner.
Kind regards
AJ
Expert:  Alex J. replied 2 years ago.
A deed is contract that has been signed sealed and delivered. It is a type of contract that can be enforced by where only one party has given a promise to do something.
Kind regards
AJ
Alex J., Solicitor
Category: Law
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Experience: Solicitors 2 years plus PQE
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