Lease termination

UPDATED: Oct 1, 2022

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Lease termination

A husband and wife who are both officers of an S-Corp signed a commercial lease together as officers of the corporation only and not personally. The two later decided to get a divorce. The husband who is the majority share holder and president decided it is in the best interest of the corporation to terminate the lease, but the wife will not agree sign the termination agreement.
Can the husband terminate the wife from the corporation/company and therefore her signature will no longer be required on the termination agreement?

Asked on March 6, 2018 under Real Estate Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If they signed as officers, not personally, then the corporation, not the husband and/or wife, is the renter. In that case, since the majority owner (the husband) has the power to make decisions for the corporation (majority rules in terms of corporate authority/power), he can terminate the lease regardless of what the minority owner (the wife wants). He can do this without removing her from the company since he can make decisions for the company; if he wants, he can also terminate her employment with the company but cannot take away her ownership interest (she will remain a minority owner, but one without any managerial, etc. authority).

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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