Tenant wants to move his lease from him to his business???

8 Replies

Current tenant is renting a SFH as he transitions his technology sales and service business headquarters from another city. He stays in the property during the weekdays when needed so he is an ideal tenant as there is little “wear and tear” and is a low credit risk. Recently his monthly rent has been late due to the fact his business is cutting the rent checks. He has asked for me to convert the lease agreement from him personally to his company. His reason is that he has to complete an expense form, get it approved (by himself) and then his accounting department has to cut a check and mail it. He states that if it was the company’s lease that it would be easier as it would be a monthly expense. My concern with this is liability but would love to hear your thoughts! Thank you all!

If it's his company he can just set it up as a recurring expense. I smell a scam here.

Yeah, He controls the process and he could start it earlier. You could modify the lease with the company and/or both he and the company in the lease, but make Him sign a personal guarantee.

There is no good reason to do it . tell him he can pay from his checking account and the company can reimburse him when ever they feel like it 

Originally posted by @Brian Wulfekuhke:
 love to hear your thoughts!

 Hypothetical:

1)You switch lease to his company name.

2) In November, the business begins earning less money and he his company starts paying rent late.

3) By March, he the company owes you two months rent and he says he the company hopes profits increases but if not then the company will also be late making April's rent.  But hey, that's okay because many businesses pay bills 90 days out, right?

4) By the end of April, you've had enough and decide to evict him.  Oops, you have evict the company because the lease is in the company's name.

5)It takes all of May and into June before the eviction is just about over.  That might be over 4 months rent.

5) When it's all said and done and he the company has been evicted ... it doesn't even harm him because it doesn't show up as an eviction under his name.

6) He convinces he next landlord to put the lease in his business' name.  Maybe he can get 6 months free rent out of this next landlord and walk away with no repercussions because the lease is not in his name.

If he wants to rent something under his business' name, he should look for office space.

Brian,
I’m not sure I agree with his reasoning some potential risks for you are;

- once in corporations name who else might be staying there?
-is he planning on subletting the place?
-I would clearly define the use of the place if your going to put it in a corporation’s name
-any potential issues with a commercial business operating in residential zones area?

Benefits for you/ways to mitigate risk;
- have him personally guarantee to lease if he wants it in his company’s name

-I’m not a lawyer but I believe a lease in the companies name might eliminate some of his tenant rights

-I would check on potential complications with suing a corporation vs an individual (I think the process is similar although if the corporation is found insolvent you will have to pierce the corporate veil to go after the individual unless it’s personally guaranteed)

Hope this helps

Thanks

Luke

The others have made legitimate concerns and I see No good that can come from this situation for you . By putting the lease in the business it removes the personal guarantee factor away from him so he’s not accountable in the future .You are asking for trouble and making a foolish business mistake if you do this . Get it out of your mind right now and don’t agree to this