commercial lease signed by several people

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alamanda

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Would anybody know anything about this:

We are a group of 4 people all working (independently, not as a group) in the arts/crafts area, and are in negotiations regarding a commercial lease on a building, which we will share for our various workshops/studios. We would like to share the responsibility for the lease and have all four of us sign it. Is there a limit as to how many people can sign, or is this entirely up to what is acceptable to the landlord? And what happens if one person needs to leave before the end of the lease? We have a constitution as a group and have registered our group name as a partnership with the CRO, which will allow us to open an account in that name.
Any information or advice on this would be greatly appreciated. Thanks!
 
Why would the partnership, a corporate entity, not sign the lease and resolve all issues pertaining to the operation of the partnership via the constitution?

I can't see a landlord signing a single lease with four individuals for a commercial property, but I may be wrong. If the partnership pays the lease from the new (bank?) account, how the funding works internally needs to be transparent to the landlord.
 
The landlord would much rather sign a lease with 4 real people than with an entity (company, partnership etc.). In fact, even a commercial lease to a limited company is likely to require the personal guarantees of the directors if at all feasible. Every landlord at this stage is wide to the problems of chasing debts from failed limited companies-it's hard enogh chasing debts from real people.

It is then the problem of the person who wants to leave the building which is much harder to resolve as they have signed a lease with the landlord and if later on the rent goes into arrears, that person is still liable as one of the leaseholders.

You might get lucky and find a landlord who will allow the entity to sign/seal the lease but I wouldn't as a landlord take that deal. Landlord might have property in an undesirable area, no good for commercial (off the beaten track, no road frontage etc.) and that landlord might be a bit more 'motivated' to get his property let to someone, anyone, anything!
 
murphaph said:
The landlord would much rather sign a lease with 4 real people than with an entity (company, partnership etc.).
Click to expand...

With a company the above is true, not with a partnership.

It is great for a landlord to sign a lease with a partnership in the situation outlined by the first poster.

A partnership means that if one of the four leave the remaining people are responsible for the lease.
If 3 people leave the remaining person is responsible for the other three, that's what a partnership means.
The landlord can also go after the personal assets of the one person to cover the debt of the other three.

I would be very weary of entering into a partnership with other people operating their own business, as you can become personally liable for their debts.

Whats happens when one person wants to leave the premisies will be goverened by a partnership agreement and has nothing to do with the landlord.
 
Thanks for the clarification pat. I've never let (yet) to a partnership but that sounds a good option for the landlord (and perhaps the only practical option for the prospective tenants).
 
Thanks to everybody for the quick response! The liability issue certainly would make us very wary of signing the lease in the partnership name. May be better to split into smaller units and sign separate leases for the two floors.
 
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