Husband liable for wife's commercial lease ?

D

Desparado

Guest
My Fiancee took out an 8 year lease on a commercial unit, with no opt-out clause, 4 years ago, for running her own business. Her business has since failed and closed down 6 months ago, but she has still paid the lease since then. Virtually all her money has gone in paying off creditors, and she still has a substantial bank loan to pay off. She is back working as an employee to continue to pay off this loan and to pay the mortgage on her house. The commercial unit is unrentable, many other units in the same premises are now also empty. The landlord has refused her request to terminate the lease nor has he offered a reduced lease. As she now has no assets left apart from her house, she is considering not paying the lease. If she decides on this course of action, could she be forced to sell her house to pay off the lease, or once we are married could this liabilty fall on me ? If anybody has any answers or alternative options, I would love to hear them.
 
Her liability will not follow you.

She should try to negotiate a lump sum settlement to get out of the lease now, citing the fact that she cannot keep up repayments. Then get a bank loan to pay it.

Worst case is that the landlord pursues her for the entire rent outstanding, gets a judgement, then a judgement mortgage registered against her house, then a well-charging order to sell her house. This will not happen if she is deemed to be doing her best to make repayments at whatever level she can afford.

She really needs to negotiate this one now rather than just stop repayments. Bearing in mind she IS liable for the entire, any reduction is worthwhile. Also remember that if the landlord successfully sues, his/her costs will be added on to any judgement made against her.
 
Vanilla,Thanks for that.

Not the news I was hoping to hear but appreciate you taking the time to give a realistic assessment of the situation..
Am not too confident about her ability to get much of a loan, given her financial situation and the current financial climate. If she can get for e.g. €20,000, and offers this to the landlord and he refuses this as a settlement, I would assume that her chances are improved in any subsequent court action ? i.e. would it still be possible that a court could enforce an order for the full amount.
She has thought about the possibility of paying back what she can each month, but who decides what’s an acceptable amount, and is this based on her own income, or could a court take into account our joint income after we are married ?
 
Well charging orders are a very rare thing. I would not worry too much about that.

would it still be possible that a court could enforce an order for the full amount.
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Of course. He is not going to look for anything less. She could enter a defence that he refused to negotiate a settlement and that she disputes the amount. That would move the matter away from the County Registrar and would be decided by a circuit court judge. It will delay things for a while and that might be enough to get him to accept a lower amount.

She has thought about the possibility of paying back what she can each month, but who decides what’s an acceptable amount, and is this based on her own income, or could a court take into account our joint income after we are married ?
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She can always try to negotiate a fair amount, but if they can't agree he would have to get a judgement and then a District Court judge would decide what is a reasonable amount. Your income doesn't come into it at all as you are not liable for the debt. Some creditors get their solicitors to imply otherwise. It is her income alone that is taken into account when deciding what is a fair amount.
 
"She could enter a defence that he refused to negotiate a settlement and that she disputes the amount."

That is not a defence - its a whinge.

A Defence is a legal reason why money ( e.g.) is not legally due. Here there is no argument but that the money is legally due.

And I'm not so confident that well charging orders will remain rare. I personally would worry about it and would be doing as much as I could to try and reach a settlement, if it was possible.

mf
 
Disputing the amount is a defence. It puts the plaintiff on proof and they will have to show the judge that the amounts are correct. It is certainly enough to get the case away from the County Registrar and buy more time to settle.
 
Based on current leasehold rents in the area, the current lease is definitely too high (It was too high even when it was negotiated, but thats easy to say in hindsight), I dont suppose that that fact would count for anything in trying to negotiate a reduced settlement ?
 
bond-007 said:
Disputing the amount is a defence. It puts the plaintiff on proof and they will have to show the judge that the amounts are correct. It is certainly enough to get the case away from the County Registrar and buy more time to settle.
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And increase the costs!

Anyway - there is no dispute on the amount. Just that its too high now - not that she did not agree to it.

mf
 
Desparado said:
Based on current leasehold rents in the area, the current lease is definitely too high (It was too high even when it was negotiated, but thats easy to say in hindsight), I dont suppose that that fact would count for anything in trying to negotiate a reduced settlement ?
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That depends on the terms of the lease and whether there is a rent review in sight. Presume your fiancee has had legal advice though?

Bond-007- in my experience well charging orders are common practice. If I were representing the land lord I would be advising him to weigh up the benefits of an immediate settlement now ( provided she can actually offer anything ) versus a long and drawn out application to get money back via the process I previously described.
 
I have certainly never come across an application for a well charging order, well certainly not in this part of the country.
 
bond-007 said:
Yes.
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I'm very surprised. I've been involved in about a dozen in the last 10 years. Currently processing three. As a general practice solicitor I would imagine my numbers would be fairly average or even on the low side compared to say a firm who would be involved in a large amount of debt collection.

And you've never come across any? How bizarre. Assuming you work in the relevant section.
 
Thanks for all the feedback.
One last question - If the landlord does not accept the proposed settlement and decides to go to court, how long does it take on average from him initiating court action to both parties ending up in court ?
 
Normally, the landlord would serve a civil bill on the defendant looking for the money. You get 10 days from the date of service to make an appearance which basically tells the landlord and the court that you intend to defend the action. You then get another 10 days to lodge the defence. Unless a defence is lodged both parties never end up in court as the landlord will get a default judgement if no appearance or defence is lodged within the time limits.

If a defence is lodged, a court date is set. Depending on the area it could take anywhere from 2 to 6 months to come up on the list.
 
Hello. I am in a similar position to this man, and the responses really frightened me. My florist shop closed down a few month ago and i still have 3 years left on the lease. I have no money apart from my house and am also a single mother. I have applied for legal aid and believe i will get it, can the courts force me to sell my house ?
 
you cant get blood out of a stone....to desperado...while i do believe it to be honourable that your fiance wants to pay her debts...if she cant she cant...if she could she would...im sure..it would be an expense to the landlord to "DRAG" her through the courts and at the end to get nothing.so suggest to the landlord keep your deposit and leave it at that...employ a solicitor to do do this for you....you can but try.
 
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