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Ash
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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My father wants me to co-sign a new 15-year lease on two buildings

Customer Question

My father wants me to co-sign a new 15-year lease on two buildings we then rent out to residential tenants (we rent to rent with the permission of the landlord). It is the cornerstone of his business, which I also work for - along with my two brothers (who also work for the company). All three brothers (and my mother) are shareholders in the company. However I am a minor shareholder with only 10% to their 25%.
I don't want to co-sign the new lease as I am the only person who owns my own home and I don't want to be liable for the rent, and lose my home, if my father's company can't pay the rent on the two buildings. The company is heavily indebted and although it needs this income from the two buildings to keep going, I have a feeling that the new rent, which is exceptionally high, pay push the company over the edge financially. If the company folds therefore, I won't have an income as the company won't be able to pay me, and then the landlord of the two buildings could come after me and my home and any assets and savings for the next 15 years until the £2.4m cumulative rent is paid. My father is saying it's my responsibility as a shareholder to sign the lease but my view is that no other company would ask their shareholders or their employees to put their own honest risk to support the company, so why should I? An I right in not co-signing this lease? I am 38, my children are 5 and 3, and wouldn't co-signing this lease have me and my children on the hook until I'm 53, and they're 21 and 19? Am I also right in saying that being a shareholder has nothing to do with the landlord wanting my father's sons to sign the lease? The company is fully leveraged and indebted and I think the landlord has seen this via company house etc and so doesn't view the company as a good enough legal covenant. What's your legal view?
Very many thanks.
Submitted: 1 year ago.
Category: Property Law
Expert:  Ash replied 1 year ago.
Hello my name is ***** ***** I will help you.
Is the business a Limited company or partnership? If its a Ltd company is the Landlord asking for personal guarantees?
Customer: replied 1 year ago.
Yes. It's a limited company and the landlord is asking for personal guarantees.
Expert:  Ash replied 1 year ago.
Legally you dont have to sign the lease, nothing in law that says you have to. Further given what you have said then I agree, I wouldnt sign the lease. This is because if the company is in debt and cant pay, the Landlord will go after the person with the biggest pot of money.
So if you have a house etc, he is likely to go after you.
Can I clarify anything for you about this today please?
Alex
Customer: replied 1 year ago.
My father has also asked us to sign a covering document from the landlords solicitor saying that we agree to waive our rights to legal advice on the matter. In your experience what are your thoughts on that?
Expert:  Ash replied 1 year ago.
That's bad news - because by law you should have legal advice and this means you dont have to.
Alex
Customer: replied 1 year ago.
So there is no law that says shareholders have to sign the document? In other words it's just at the whim of the landlord, a term he's had put in there to secure his own interests?
Expert:  Ash replied 1 year ago.
No.
Alex
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10915
Experience: Solicitor with 5+ years experience
Ash and other Property Law Specialists are ready to help you
Customer: replied 1 year ago.

Hi Alex,

A tenant hasn't paid her October 23rd rent, but paid her November 23rd rent. She then just moved out on November 28th giving no notice. She then sent us an email saying she'd moved out for reasons detailed below in her email to us.
She didn't pay a deposit as our tenants pay their first and last month's rent instead (is this an acceptable practice as I was advised to do it by a reputable high street estate agency?).
She also didn't find a replacement for herself, instead forcing her co-tenants to find her replacement as all four of them are on the same agreement.
Do we have to give her back her 'last month's rent amount' (what she's referring to as her deposit) as she didn't pay her October rent and moved out with no warning)?
Can we use her 'last month's rent' to cover her October 23rd rent?

Expert:  Ash replied 1 year ago.
Yes you can.
Alex
Customer: replied 1 year ago.

Hello Alex, so first and last month's rent up front is an acceptable practice when a tenant moves in?

Also if the tenant didn't pay her October 16th rent, then paid her November 16th rent (but 8 days late, on the 23rd November), but moved out 4 days later and her replacement isn't due to move in until January 23rd, what period in days can we chase her for rent?

I'm thinking: October 16th-November 15th period (ie the month she didn't pay her rent for, we'll just keep her last month's rent she gave to us when she moved in.
Then we'd also invoice her for the rental period starting December 16th (when the current period she paid for expires) to January 23rd when the new tenant moves in.

So that's:

1) Keep her 'deposit' to cover her October 16th rent

2) Invoice her last fees for the 7 days from her November 16th rent date and November 23rd when she actually paid her rent (we have 6% per day in our contract - is this an acceptable figure)

3) Invoice her for the rental period from December 16th to January 23rd.

Is that all correct?

Would we also invoice her for late fees at 6% per day for rent not paid from December 16th to January 23rd?

Would we just sue her for late fees from October 16th-January 23rd for her October late fees?

Then sue her as a separate amount for her late fees for her December 16th to January 16th rent

Then sue her as a third separate amount for her late fees for her January 16th rent until January 23rd when her replacement takes the bedroom?

THESE ARE THE REASONS SHE GAVE FOR MOVING OUT - SHE MOVED INTO A BEDROOM AS A PREVIOUS TENANTS REPLACEMENT, TAKING THE PREVIOUS TENANT'S PLACE ON THE 4-PERSON AST. SHE WAS BROUGHT IN BY THE TENANTS, NOT US

When I first moved in my room was a complete state, including chocolate wrappers left over from the previous tenant (Carla). I have done my utmost to keep it clean, including scrubbing the floor with antibacterial wipes.

I became incredibly and inexplicably ill with a systemic virus for a month and was moved from 3 different hospitals since I have been living in*****

The freezer has not been working for about a month now which means I have not eaten in the flat for that long. I believe it is still not working.

There is an infestation of mice and has been since I have lived there.

The above two points I believe you have been made aware of for some time.

Last night I woke Michael up several times as I could not sleep due to inexplicable noises, which I thought was a mouse in my room. I checked everywhere, as did Michael. I even looked outside on the roof - as my window does not close properly it could get through at head height. Eventually I found a mouse trying to share my bed. It then ran up on to my chest of drawers amongst my toiletries and toothbrush. By the time Michael was in there it was in behind my bed and disappeared. I'm afraid I have had a complete sense of humour failure and will not be sleeping there again.

I am not normally precious about this kind of thing, having grown up in the country and cleared out a rat infestation from work last year but mice trying to share my pillow, potentially carrying deadly viruses, is a step beyond my tolerance levels.

I will be moving out at the end of the month. I think the others would very much appreciate it if you acted on this as a matter of urgency.

Best wishes,

Perdy

Sent again 04/12/2015

I sent this to you both last week and have heard nothing back. I no longer have a key and given the state of the property since I have lived there – with no working wardrobes and general filth I would be grateful to get my deposit back. However, given you have both been perfectly nice as landlords I won’t take this any further. As Camilla is still living there I highly recommend that you do sort this out as the state of that flat is utterly disgraceful and I don’t think you would want authorities anywhere near it. If that flat is infested with mice, the others must be too (Tom’s included).

Please let me know when you have transferred my deposit back which was a month’s rent in advance at £593. I am requesting this because I was not given the option of giving you a month’s notice, I had to find somewhere else to sleep that night.

If you need to contact me, my details are below.

Today: 08/12/2015 – Sent again

When I first contacted you, neither of you replied, I also tried to call to confirm this with you, there was no response and no one called me back. I now understand that was the reason Karla moved out. I was unable to sleep in a bed with mice in it and eat food without a working fridge, I believe this constitutes an uninhabitable flat.

Best wishes,

Expert:  Ash replied 1 year ago.
To be fair this is a new question you are asking, as your original one was about co signing a lease.
Sadly you will need to open a new question for this
Alex
Customer: replied 1 year ago.

It is as just answer wouldn't let me ask it via the traditional route. How can I send it to you so that you answer it?

Expert:  Ash replied 1 year ago.
Just start a new question with 'For Alex' and I can pick it up.
Thanks
Alex
Expert:  Ash replied 1 year ago.
Hi

I am just following up to see if there is anything else I can help with?

If you have not done so already might I ask you to rate my answer before you go today please, the button should be at the bottom of the screen.

If you need more help please click reply.

Alex

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