Am I liable for the terms of a lease that was signed before I purchased an existing business?
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Am I liable for the terms of a lease that was signed before I purchased an existing business?
I purchased a business last year that had an existing lease at a commercial property. The purchase was set up as a purchase for the membership units of an LLC. After the purchase, I changed the name of the LLC, filed for a new FEIN, changed accounts, etc. We have been in the same location since the purchase. In the lease agreement however, the lessee is listed as the previous LLC name, signed by the previous own Being that I have purchased the LLC and changed the LLC name, am I legally bound and liable for all the provisions outlined in the lease? Would the lessor be able to pursue me or my company in court for the remainder of the lease if I ever defaulted on the agreement?
Asked on December 9, 2016 under Business Law, Georgia
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
If you have only purchased the assets of the LLC (e.g. accounts receivable, inventory, customer list, "good will") but not the LLC itself, you would not be obligated to the lease. However, you write that bought the membership units--that is, you bought the LLC itself. Having bought the LLC, you--or more accurately, the LLC--is still liable under the lease even if you later changed the name, etc. The entity you bought is the same one obligated under the lease; changing its name doesn't change that obligation, the same way a person is liable for an apartment lease even if, say, she married during the lease and changed her name, since she is the same person obligated under it.
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