Lease Agreement when Renting to a corporation vs. individual
Los Angeles, CA · Member since 2016 · 565 posts · 391 votes
Do we have the same restrictions when leasing a single family house to a corporation as to individuals?
Most tenant protecting regulations are irrelevant for corporations especially when in a rent control region/context. For instance a corporation may want to get a discount and pay one year rental ahead of time. We can't do such things with an individual tenant.
So question is: How can the lease agreement be different when renting to a company?
Hi @Kevin Lefeuvre, This is an interesting question. As a landlord I definitely would make sure to beef up the sections of the lease regarding the purpose of the rental, the number of people who can live there, the restrictions on subleasing, personal responsibility...maybe more. For example, can the corp move different people in and out every week? Is it a long-term housing for one family or short-term housing for many different people? Can they engage in business activities there? Will it become their corporate office? Is that allowed in your zoning? Can they turn it into an airbnb?
Remember too that a corporation is a liability shield. So if they destroy something, no one person has responsibility. I'd add something to the agreement making an individual person take responsibility. This is what banks have in the mortgage papers when they lend to LLCs or Corps, making one or more individuals take responsibility.
And, as far as paying for the whole year in advance, that almost always ends badly because it makes it difficult to get the tenants out if there is a problem.
These are just the things I thought of off the cuff. If you want real legal advice and help with your lease, feel free to PM me.
Jen
Hi @Kevin Lefeuvre, This is an interesting question. As a landlord I definitely would make sure to beef up the sections of the lease regarding the purpose of the rental, the number of people who can live there, the restrictions on subleasing, personal responsibility...maybe more. For example, can the corp move different people in and out every week? Is it a long-term housing for one family or short-term housing for many different people? Can they engage in business activities there? Will it become their corporate office? Is that allowed in your zoning? Can they turn it into an airbnb?
Remember too that a corporation is a liability shield. So if they destroy something, no one person has responsibility. I'd add something to the agreement making an individual person take responsibility. This is what banks have in the mortgage papers when they lend to LLCs or Corps, making one or more individuals take responsibility.
And, as far as paying for the whole year in advance, that almost always ends badly because it makes it difficult to get the tenants out if there is a problem.
These are just the things I thought of off the cuff. If you want real legal advice and help with your lease, feel free to PM me.
Jen
can the corp move different people in and out every week? yes
Is it a long-term housing for one family or short-term housing for many different people? could be both
Can they engage in business activities there? no
Will it become their corporate office? no
Can they turn it into an airbnb? no
"paying for the whole year in advance, that almost always ends badly because it makes it difficult to get the tenants out if there is a problem." That was just an example. The question was are the same restrictions valid for a corporation.
Sometimes legal advice is straight forward. Sometimes you can have legal advisers with opposite views and interpretation. That's why sometimes I ask for additional thoughts on a forum like here.
Thanks again for replying. I'll definitely connect.