Getting a lease on my name, urgent question

[Archatype]

I am about tot take over a lease of A3 shop and the landlord is refusing for it to be bought through my company and he says I can only have it under my personal name.

Are there any risks to be aware of by accepting this? Is it quite a prevalent requirement from landlords ? pros and cons?

Cheers!

 

[Scalloway]

I believe it is quite common. It means that if your company goes bust he can still collect the rent from you.

 

[KeithP]

Basically if the lease is in your name and you default on the lease, the Landlord can take legal action against you personally to recover any outstanding debt.

If the lease is held by a limited company which becomes insolvent, the Landlord would need to join the list of Creditors and the chances of them seeing anything are generally not great.

You might want to ask them if they'd consider putting the lease in the company name but perhaps with a larger security deposit. The request for you to personally sign the lease doesn't seem unreasonable of the Landlord who obviously want to reduce their own risk.

 

[Archatype]

Thanks a lot guys

 

[Talay]

With the greatest respect, the fact that you don't know highlights the imbalance between you and the landlord and why you should perhaps have been dealing through an intermediary acting on your behalf.

The rent is not the only thing you need to be aware of.

I suggest backtracking and obtaining some representation to truly go through the lease and explain just what the full extent of your obligations are.

Some good advice already on raising a larger deposit but in this depressed market, there are very few scenarios where you need to be so hasty.

Counter negotiations covering rent reductions, free periods, reviews, break clauses, repairs, etc. should all be on the table, as is the always on the table option to walk away.

 

[arcon5]

The risks are dependant on the content of the lease. Which your acting solicitor should be able to go through with you.

Commercial leases are a real mine field and if you sign it personally and don't know the risks then I certainly hope you are not a home owner or a wealthy man because if your business goes belly up you can say bye bye to some of these if the LL holds you to the lease - which is why he wants it in your name personally, this is worth way more than a standard quarter equivalent deposit.

If you do sign it in your name then ensure there are sufficient break clauses and reasonable notice periods along with a cap on any liability relating to the building and its conditions.

I'm betting the LL is also pushing for a full repairing an insuring lease also, if so seek to change this to internal only or have a solicitor place caps and clarity as to exactly what you are responsible for and not responsible for in the lease.

It would also be more secure to simply sign a personal guarantee for rental only limiting your personal liability to 3 months for example.

Speaking as somebody who made this exact mistake, I strongly urge you to speak to a solicitor. The fee will be around the £1k mark but could potentially save you so much more in the future.

 

[Alan R Price]

I'd never sign a lease in my own name or give a personal guarantee for one - the financial risks are too high. Offer a cash deposit against future rent; that way your liability is limited. If the landlord insists on a lease in your name, find other premises.

 

[cclovely]

Hello,

I myself took a lease in my own name in the past. 2 years on and ive had no problems, my landlord is a great guy though and often pops down for a cup of tea. Despite being on a full repairing lease, hes knocked of rent to support work that ive wanted to do and so on.

I understood that being a business with no account, in the current climate made me very unappealing, so I negotiated and signed the lease in my name and only paid a one month deposit as opposed to 3. This extra few thousand gave me some security and I also paid 6 months upfront in rent as opposed to 3, which was my choice. This gave me plenty of time to get going.

Its a big risk to put your name down if you do not have the means to pay the rent IF the worse happens and it can, my business has been successful and I was very confident it would be but anything could have happened. Some may say it was a stupid risk but for me, it was that or nothing.The type of premises I needed was few and far between and out of 2 in 10 properties that were suitable, 0 wanted to accept my use, until I finally found this place. I weighed up the pros and cons and come to accept it was my name or nothing.

Id suggest offering a higher deposit first OR, you could put in a clause to say that after 6 month/ one year the landlord WILL change the lease into the company name if X Y Z. Then your risk is minimised as its only temporary. Bare in mind the legal costs 6 months/ one year down the line when changing the lease.

Good luck