ATLANTA PROPERTY MANAGEMENT, BROKERS, AND AGENTS ATTORNEY
The experienced real estate lawyers at the Hecht Walker, P.C. in Atlanta draft leases and handle a number of other legal matters on behalf of the real estate community, including commercial property managers, tenants, individual real estate brokers, entire brokerages, licensed real estate agents, and landlords who are our clients in the metro Atlanta area and across the state of Georgia. Our real estate attorneys defend against and pursue writs of possession and judgments, but perhaps even more importantly, we seek actual payments on behalf of our clients.
For whatever reason, many of the principals of corporations and limited liability companies often believe they can just walk away from their leases with our clients without any concerns about individual liability. At Hecht Walker, P.C. we disagree – and we make a difference. Our attorneys understand that it is critical to put serious legal pressure on the principals of companies when they try to walk away from their legal responsibilities.
An experienced Atlanta real estate attorney at Hecht Walker, P.C. knows the right questions to ask and the right answers to pursue in order to place such legal pressure on those who are trying to ignore their obligations regarding a commercial lease. The facts about the utilization of the leased space and the facts about corporate dissolutions can often put the fear of a large liability upon the principals of commercial lessees. As a result, once the terms of the contract are clearly spelled out and their personal risk is clearly illustrated, some of these individuals become more willing to negotiate a satisfactory out-of-court settlement.
“PIERCING THE CORPORATE VEIL”
Admittedly, the “veil” of the corporate entity is often going to protect the principals of a company lessee. However, facts may be discovered that result in the piercing of that corporate and limited liability veil. Some of the critical legal questions that Hecht Walker, P.C.’s attorneys routinely ask in these circumstances are explained here.
- For what purpose was the leased space actually utilized? If the space was not utilized by the tenant as represented in the lease, or if the space was utilized to perpetrate a fraud on consumers, or in violation of certain state or federal laws, and in violation of the usual lease representation by the tenant that it will only use the space in compliance with all laws of this state and the United States, then an avenue may present itself to pierce the corporate veil and to ask a court to impose individual liability on the lessee’s principals.
- What happened to the assets of the entity near to or during the time of default? If the principals distributed significant assets outside of the corporation near or during the time of the default, then the principals may be liable for the fraudulent conveyance of assets outside of the corporate entity to avoid the lease liability. The persons or entities to which the transfers were made may also be legally liable for the amount of the conveyed asset.
- Were the representations and financial records presented at the time of negotiating the lease accurate records? If the principals or any of their officers presented bloated financials, misrepresented their sources of revenues, or falsely presented lower expenses, they may have perpetrated a fraud against the lessor for which they may be individually liable.
- What is happening now with the assets of the lessee and its principals? In other words, if the principals or the entity intentionally undercapitalized the entity, or if they are dissipating previous assets of the company, Hecht Walker, P.C.’s attorneys may ask a court to grant a temporary restraining order or interlocutory injunction during a part or all of the litigation. The injunction or restraining order will automatically freeze the ability of the lessee’s principals to transfer the remainder of their assets. Their inability to operate or to utilize those assets can often be an effective tool during this kind of litigation.
- Has the tenant filed for bankruptcy while under suspicion for a fraud or another criminal act resulting in a civil loss claim? If so, the tenant’s debt obligation might not be dischargeable through the bankruptcy process. Our experienced Atlanta attorneys at Hecht Walker, P.C. can pursue the non-dischargeability of the debt.
The ultimate point of these and other questions is to acquire real dollars for our clients. Sometimes, recoveries are possible when at first they seem to be impossible. Other times, no real assets exist in the entity or with the principals. However, a cost-benefit analysis will usually give you a way to determine which legal tools to use or not to use. Hecht Walker, P.C.’s team of legal professionals provide clients with the opportunity to use those tools when appropriate.
ALTERNATIVES TO WALKING AWAY FROM A COMMERCIAL LEASE
The principals of commercial tenants who are facing financial issues that will impact a lease have much better legal alternatives than trying to walk away from the lease. When someone walks away in this situation, he or she will probably, eventually be liable to the landlord for damages that will be measured by (among other things) the cost to re-rent, rent before the new tenant starts paying, any needed repairs, and any reduction in rent that is necessary to acquire a new tenant. Frankly, a lessee’s principals could be on the hook for the same amount of rent that would have been paid out if they had remained in the property.
Instead of walking away from a commercial lease, the principals may want to consider subleasing the space to somebody else who can use it. Even if they have to sublease at a discount, it will probably cost them less than getting sued by the landlord. Whatever they decide, the plan should be discussed with a real estate attorney to make sure that nothing is overlooked that might leave the principals in legal conflict with a landlord.
Each Atlanta real estate attorney at Hecht Walker, P.C. has substantial experience in property management, real estate, and broker law in Atlanta and throughout the state of Georgia. Combined, our real estate attorneys have tried over four hundred cases, have served as lead counsel in over one thousand hearings, and have carried out over five thousand commercial foreclosures on behalf of our clients. We have the experience to attend to your litigation and trial needs for property management, real estate, broker, agent, or tenant matters. Contact Hecht Walker, P.C. today to discuss your case in a free consultation. Call 404-369-3073.
This information was posted on 08-31-2016 and does not constitute legal advice nor does it create an attorney-client relationship. The law changes on a daily basis, and the reader should engage an attorney through a written agreement before taking action in this area of the law.