In forfeit of commercial lease

contrarymary72

I wonder if anyone out there can help. I am at the end of my tether and have been sent from pillar to post with free advice lines.
My limited company business (coffee shop) has failed and I am no longer trading (and no longer paying rent) and I am in forfeit of my lease, but the landlord (the local council) is refusing to repossess the property stating that I have to 'sell' (reassign) the lease, but remain as guarantor. I have no money, assets and am on a personal debt management plan (through Step Change). I plan to 'strike off' the company once 3 months have lapsed, but am a personal guarantor on the lease, so am still personally liable both for that and then the business rates when they transfer the lease into my name.
I am willing to 'sell' the lease, but only if I can relinquish liability as part of this.
I am losing sleep and really don't know where else to turn. I have no equity in my house (have a mortgage with all payments up to date), a car on HP (payments up to date) and am working as a supply teacher currently. My husband has a permanent disability so is on ESA support and PIP. I have 2 daughters at university and a school aged daughter. Does anyone know how I can get free advice on a commercial lease? I have tried CAB, Consumer advice line and Business debtline.

daveyjp

You are liable for the terms of the lease until it expires.

As you have the opportunity to assign put your efforts into doing so.

lincroft1710

The one piece of info you don't give is how long the lease has to run. Also with a small coffee shop you should be below the threshold for actually paying Non-Domestic (Business) Rates.

bris

As the guarantor you are still liable for the rent. You should try and find someone to take over the lease ASAP. If selling it is hard, which it will be give it away to someone who the council will approve to get it off your hands.


The longer you have it the more debt you are running up. The whole point of a ltd co is to protect yourself from this, going guarantor was madness.

contrarymary72

Thank you for your replies.
You are right about being a personal guarantor and I tried my best to avoid this - but it was the only way I could get approved for the lease. I went for numerous premises, and every one of them insisted on this, so in the end I had to do it.
Re business rates: Sadly, it is not below. It is in the middle of a town centre so is valued at £18,000.
I intend to try and assign the lease (at no upfront cost) but am incredibly nervous about being guarantor, as I may end up being liable for even more if they don't pay yet stay in the premises.
The lease has another 9 years to run with a breakout clause in 2 years.

phill99

bris wrote: »

As the guarantor you are still liable for the rent. You should try and find someone to take over the lease ASAP. If selling it is hard, which it will be give it away to someone who the council will approve to get it off your hands.


The longer you have it the more debt you are running up. The whole point of a ltd co is to protect yourself from this, going guarantor was madness.

In fairness this is standard practice for start up companies with no trading records. So its not like the OP had a choice.

Savvy_Sue

contrarymary72 wrote: »

Does anyone know how I can get free advice on a commercial lease? I have tried CAB, Consumer advice line and Business debtline.

Sadly for you, almost certainly nowhere. And it's why we always recommend getting 'proper' (ie paid for) advice before signing a lease.

I hope you're able to find someone to take over the lease, that is your best bet even if you remain liable as guarantor.

lincroft1710

What honestly are the chances of being able to assign the lease? Is it a vibrant town centre with maximum occupancy of units and the shop being in a good trading position with plenty of footfall or is it the opposite?

Do you know how long you can financially survive if you can't re-assign the lease?

John_G_Jones

contrarymary72 wrote: »

Thank you for your replies.
You are right about being a personal guarantor and I tried my best to avoid this - but it was the only way I could get approved for the lease. I went for numerous premises, and every one of them insisted on this, so in the end I had to do it.

And as you can now see, your landlord was eminently sensible to demand it as it is now being called upon.

As others have said, you don’t get to set conditions here, you need to find someone to take the lease off you and accept that you retain responsibility should they fail to pay.

Pennywise

John_G_Jones wrote: »

And as you can now see, your landlord was eminently sensible to demand it as it is now being called upon.

As others have said, you don’t get to set conditions here, you need to find someone to take the lease off you and accept that you retain responsibility should they fail to pay.

And make sure you invoke the break clause so you can escape it as soon as you can.

Savvy_Sue

Pennywise wrote: »

And make sure you invoke the break clause so you can escape it as soon as you can.

Although ... will that make the lease more or less attractive to others? (I agree with you, being responsible for something for two years is a lot less scary than the full term, but it could make it more difficult, couldn't it?)