We in 2005 my husband and I sold our shares of our business in Georgia to our business partner b/c my husband got a job offer in North Carolina. While we were in business we had a lease on video equipment to monitor the building. In 2006 our business partner sold the business that has now undergone several additional changes in ownership. Apparently after our business partner took over the business in 2006 he stopped paying the lease. Now the company has tracked us down to North Carolina and are suing us for the amount due, our home and all other assets we may have. I need to also state that my husbands name/signature was on the original lease. Please advise.
Estate Planning Attorney
You will want to contact a business attorney who does litigation in North Carolina. I am assuming from what you don't say that no one had the landlord remove your husband from the lease liability when your husband left the business. The change in business ownership may not be a deciding factor in your husband's liability to the leasing company. However, your husband may be able to seek reimbursement from the former business partner or the new company owners if they benefited from the equipment. An attorney who hears all the facts and reviews the paperwork will be able to give you a more definitive answer.
Estate Planning Attorney
To correct my previous answer: You may want to contact an attorney in Georgia, not North Carolina, as it appears from your facts that the lease was entered into in Georgia.
I am not a Georgia attorney and cannot give you legal advice regarding Georgia law. I am licensed to practice law only in Minnesota. My posting is limited to my knowledge of the laws of Minnesota.
I would first determine in what capacity your husband signed the lease. If your husband signed the lease as a property authority of the business (owner, member, President, etc.), then it is possible for the lease to be transferred to the new owner in the sale. Generally, however, the lease will contain a clause restricting its assignment. I will refer back to that point later.
Next, I would determine if the sale of the business included the lease. To do so, it is necessary to know how the sale of the business was structured. If the sale was structured as an asset purchase, then I would determine if the lease was an included asset. If the lease was included as an asset in the asset purchase agreement AND if there is no non-assignment clause in the lease, then the lease likely transferred to the new owner. If the lease did contain a non-assignment clause, any attempted transfer through an asset purchase sale would likely be void if the non-assignment clause itself is valid.
If the sale was structured as a stock or membership sale, then, in general, all assets and liabilities of the corporation or LLC transfer in the sale and it is likely that the lease transferred to the new owner.
Finally, it may be important for you to determine who owns the lease now. To do so, you will have to analyze each sale of the business and whether or not the lease transferred in the sale. Because this is a complex analysis and the documentation for this analysis is likely not available to the leasing company, they have sued the person who signed the lease. It may be helpful for you to show who the current owner of the lease is during the litigation and you would be well suited to find a competent attorney who practices in this area of law to work with on this matter. And if you do end up paying to settle (or are ordered to pay) the lawsuit regarding the lease, you may have recourse against subsequent owners of the lease.
This posting is meant to provide general information regarding the sale of assets and a business in Minnesota and should not be construed as legal advice.