What happens to a commercial lease once a partnership is dissolved?

Asked almost 2 years ago - Los Angeles, CA

Two individuals jointly signed a lease for commercial property for 5 years. They began a partnership, and conducted business on the premises, for a while, but soon thereafter the partnership was dissolved.

Absent partnership agreement terms covering this issue, what happens with the lease? Of course both partners remain liable on the lease. But what if both partners wish to continue to use the leased premises, but they don't get along to be able to share? Is the lease considered an asset or a liability? In other words, what happens if one partner wishes to exclude the other from use of the premises?

Attorney answers (3)

  1. 9

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    Best Answer
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    Answered . You need to consider mediation, which is a non-compulsory procedure that attempts to fashion a win-win scenario instead of litigation which is almost always a win-lose.

    You are correct both are liable on the lease. If you can't work it out, perhaps you can both sublet so that neither benefits to the detriment of the other.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may... more
  2. 7

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    Answered . I agree with Mr. Doland. I would add that neither of you can exclude the other from the premises absent an agreement to that effect.

    This answer does not constitue legal advice, nor does it creat an attorney/client relationship. If you are... more
  3. 6

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    Answered . I agree with my colleagues' excellent answers. You are both probably liable for the entire rent and cannot exclude the other. Thus, some form of cooperation is essential.

    I want to point out some newer leases require mediation before litigation or you cannot recover your attorney's fees if you prevail. This creates a strong incentive to mediate. Thus, you should carefully read your lease.

Related Topics

Small business LLCs

An LLC (limited liability company) is a business entity that has elements of both a corporation and a partnership (or sole proprietorship).

Small business partnerships

A business partnership is an arrangement whereby parties enter an agreement to cooperate for their mutual benefit.

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