A retail lease I am considering signing lists- my name first, Dba: my business name. We are incorporated so how should it read?

Asked about 2 years ago - Folsom, CA

We formed a corporation a year ago and one of the benefits I wanted was the liability protection for events such as the addition of another California retail location. The rest of the lease agreement looks sound and I am familiar with. Throughout the agreement it lists the Tenant as John Doe Dba: A1 Jewelry. The legal name of the corporation is A1 Jewelry, Inc. By listing my name first am I liable versus the Corporation? Can they take from personal funds should things go bad?

Attorney answers (5)

  1. Frank Wei-Hong Chen

    Contributor Level 20

    10

    Lawyers agree

    Answered . If your business is now a corporation, you should definitely ask the landlord to revise the commercial lease so that it names your corporation as the tenant.

    If the lease still says John Doe d/b/a Company Name, you will be personally liable for all obligations under the lease. That means if things go bad, you have personal liability for sure.

    Many commercial leases will nevertheless require a personal guaranty. If so, you might not be able to escape personal liability.

    Frank W. Chen is licensed to practice law in the State of California. The information presented here is general in... more
  2. Kenneth Allyn Sprang

    Contributor Level 15

    10

    Lawyers agree

    Answered . The Lessess should be A1 Jewelery, Inc. all the way through. The signature line should be A1 Jewelry, Inc., by John Doe, President or whatever title you use. The way it is set up now you would be the lessee personally. That means personal liability.

  3. Brandon Kavanagh

    Contributor Level 12

    9

    Lawyers agree

    Answered . You need to get the lease corrected to say that the tenant is "A1 Jewelry, Inc., a California corporation" and the signature line needs to show your position with the company next to your name with the name of the company either above the signature line or right below it. As the other posters have said, signing in your personal name d/b/a A1 Jewelry will open you up to personal liability.

    Mr. Chen pointed out that you may still have to sign a personal guaranty, which is generally the industry standard. While that may still cause you to face personal liability, you may have the negotiating strength to be able to get limited liability as a guarantor that either has a monetary cap, a limited duration, or other methods of limitation that can limit your personal liability.

    Disclaimer: This answer is provided for informational purposes only, does not constitute legal advice, and does... more
  4. Scott Wesley Williams

    Contributor Level 4

    5

    Lawyers agree

    Answered . Aside from the good legal answers above, the practical answer depends on how much leverage you have over the landlord. How much time is left on your lease? The less the better.

    If you are willing to extend your lease, this would be a good time to propose a new lease, in the name of your corporation, starting now. This is where you have the most leverage to negotiate terms, such as a corporate lease with either no personal guarantee or one that is limited in scope and duration. To do this, you'll have to have a solid track record of timely payments under your existing lease.

  5. Bruce Allan Wilson

    Contributor Level 15

    3

    Lawyers agree

    Answered . Most smart landlords will ask you to sign the lease personally because they do not want to risk leasing to a relatively new business with minimal business history and not getting paid if the business does not succeed.

    BW

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