Full question:
scenario a married couple own a business that business leases a property the lease includes a personal guarantee later the business fails and cannot pay the rent the landlord sues and the business has no assets one spouse now has an inheritance (did not have it when the lease was signed or when the business 1st failed) can the landlord go after the inheritance?
- Category: Landlord Tenant
- Subcategory: Lease Termination
- Date:
- State: Arizona
Answer:
A personal guarantee is a separate agreement where one person agrees to pay a debt if the primary debtor fails to do so. In rental situations, the landlord typically tries to collect from the tenant first before pursuing the guarantor.
If the business fails and cannot pay rent, the landlord can sue both the business and the individuals who guaranteed the rent. This lawsuit is separate from any eviction process initiated by the landlord to reclaim the property. After eviction, the tenant is usually responsible for any remaining rent under the lease. The landlord must make reasonable efforts to re-rent the property to minimize losses. If they cannot re-rent it or can only do so at a lower rate, they may sue for the lost rent.
If the landlord obtains a judgment for the unpaid rent, they can enforce it against the guarantor's assets. This includes various methods such as:
- Voluntary compliance: The judgment debtor may pay the owed amount voluntarily.
- Judgment lien: A lien can be placed on the debtor's property, which must be satisfied when sold.
- Execution and levy: This involves seizing the debtor's property to satisfy the judgment.
- Wage garnishment: A portion of the debtor's wages can be directed to the creditor.
If the spouse who is a guarantor has inherited assets after the lease was signed and the business failed, the landlord may pursue those assets to satisfy the judgment.
It may be beneficial to consult with a local attorney for assistance in negotiating with the creditor.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.