Sublease Violation

[khoang5711]

My question involves landlord-tenant law in the State of: CA

4 years ago, we sole a beauty salon and subleased to buyer A until Sep 2010Buyer A later subleased to B without noticing me. The landlord was aware of this transfer as well. In 2008, B failed to pay the rent and the landlord served me & buyer with a notice to pay rent or quit. At that time, the outstanding balance was $10K. Buyer A verbally agreed to pay rent but didn't pay after all even though A was still doing business on the property we subleased. The outstanding balance now increased to $20K. The landlord will proceed the lawsuit against me & buyer A if we don't settle by 8/31/09. My questions are

1/Am I or is A responsible for the liability?
2/The landlord failed to inform me the lease transfer between A to B, can we use this as excuse not to pay?
3/Am I responsible for the time that A has been doing business & made profit but failed to pay the rent?
4/What should we do in this case? Negotiate with A to pay partial or go to court.

Thanks.

[SChinFChin]

My question involves landlord-tenant law in the State of: CA

4 years ago, we sole a beauty salon and subleased to buyer A until Sep 2010Buyer A later subleased to B without noticing me. The landlord was aware of this transfer as well. In 2008, B failed to pay the rent and the landlord served me & buyer with a notice to pay rent or quit. At that time, the outstanding balance was $10K. Buyer A verbally agreed to pay rent but didn't pay after all even though A was still doing business on the property we subleased. The outstanding balance now increased to $20K. The landlord will proceed the lawsuit against me & buyer A if we don't settle by 8/31/09. My questions are

1/Am I or is A responsible for the liability?
2/The landlord failed to inform me the lease transfer between A to B, can we use this as excuse not to pay?
3/Am I responsible for the time that A has been doing business & made profit but failed to pay the rent?
4/What should we do in this case? Negotiate with A to pay partial or go to court.

Thanks.

1- In the sublease situation, "YOU" are responsible for the lease if:

-- You signed the orginal lease and gave your personal guaranty.
-- You did not received a "release of lease" from the landlord, for the obvious reason you kept the place and subleased it.
-- "A" is responsible for paying you.

2- Unless there is a clause in the sublease, or assignment agreements requiring the landlord to notify you, he has no legal obligation to do so. "A" is responsible to notify you.

3- Yes, in a sublease, it does not matter if "A" made any profits and ran off with it, the landlord still has to be paid.

4- You pay what is due the landlord and sue "A".

BTW, I sold a business with a leashold. With the agreement of the landlord, even though the lease was assigned to the buyer, he pays the landlord directly, but if he FAILED to pay the rent, I can evict him, and I REGAIN the leasehold with all the attached equipment, and I am entitled to sell that business once again to someone else to recoup my losses.

In addition, the buyer is a "S Corp", and the agreement also calls for his resignation as the President of the S Corp, voting rights turned over to me, if he fails to pay the rent, or the "note" due from the sale of the business.

I don't know if in your sale of the business, all of these safeguards are written into the P&S agreement.

Also, my dad rented stores for over 30 years, and he had a case where the original owner sold the business to, then A to B, then to C, and finally D who failed to pay the rent. Neither A,B,C, nor D notified my dad of the sale of the businesses over a period of 10 years, and when eviction time came, he also went ahead to enforce the personal guaranty provided by the original owner, who by this point is happily over 10 years into his retirement.

Based on his, if you sell a business, better get a release of your lease, and have a new one made between the landlord and buyer, to leave you out completely, and obtain a "release of lease" to get you off the guaranty.

[khoang5711]

Really appreciate your advise.

I & my husband are original signar but on the sublease, I & my husband & the other two all signed lease.
1/Are I still liable? 2/
If yes, what percentage? 100%, 25% or 50%. Can we sue A for partial I & my husband is liable?

[SChinFChin]

Really appreciate your advise.

I & my husband are original signar but on the sublease, I & my husband & the other two all signed lease.
1/Are I still liable? 2/
If yes, what percentage? 100%, 25% or 50%. Can we sue A for partial I & my husband is liable?

In that case, you, your husband, and the sublessor ("A") are jointly and singularly liable. Jointly and singulerly means you are 100% liable if the other person can't pay. So YOU owe the landlord 100% if "A" skipped town, and then you sue "A" for what you are out.

I'm telling you this because this is the way you guys did the paperwork.

I don't know why it was done this way, but the consequence is the place is YOURS, if you want to go back in and re-open the business. When I sold my business, I got a release, the buyer's name only is on the new lease, but I had an arrangement with the landlord that it comes back to me, via an assignment under the new lease, if the new guy doesn't pay the rent, or pay me the note. The arrangement is more convoluted, but it protects me, and does not make me liable for the rent if "A" skips town,, and if I choose not to go back into the business, I can choose not to exercise the assignment, and then I'm out of the picture completely, not owing a thing.