My parents run a small business and they are almost $100k behind in rent...
My parents have had a small business for about 20 years. I'd say for about the last 5, they've been running a loss. They poured all their liquid savings and some loans from family to keep it afloat but it's only gotten worse.
Last year they got behind on their commercial rent. This year they just haven't paid it at all. Their total back-rent is around $90k and growing.
What is really odd is their landlord has not brought this up at all. They just keep invoicing them each month like nothing's happened. Stranger still is their lease ended at the end of June, but no word from landlord. Just monthly invoices for the rent.
My dad keeps saying stuff like "well cause of COVID they'll probably have some program to forgive all my back rent".
Any idea what the landlord could be up to? I'm afraid they are eventually going to demand/sue my parents for the full amount + interest.
The business is set up as a sole proprietorship under my father's name. They have about $350k in home equity (their only asset now) that I'm afraid they are putting in jeopardy by keeping this up.
I think congress passed a new bankruptcy law this year and strengthened it in the CARES act. Look into that option. THe landlord probably can't sue for anything past the June lease. Sadly, it looks like its time to just pack it up. Do not sell the house to pay the landlord. Theses are difficult times. Look out for yourself first.
5 years with 100k in debt is too much and too long. The landlord knows that he could probably come after their assets, your house; and is holding out. I’d say sell the house to pay off the debt, move into a smaller house, and find another way to make money.
There are many dynamics between landlord and business owner. The landlord knows what he has in it, how long he's held it, what his tax situation is, and on the income side... how long have your parents been there, how does their rent compare with the actual cost of ownership... lots of stuff. Biggest one is, what's the landlords alternative? How 'rentable' is the space, and would any other business be struggling?
Final option is the landlord is going through something. Maybe it's a small business, and he's out of the picture for some reason. If it's a larger business that's not well run (the landlord) your parents for the time being are falling through the cracks. With the pandemic, it's probably brought them more time. I'd see some forgiveness on some of what's owed, but not the entire amount.
This is legal territory and FAST. There are very important things you need to know and they all matter. The rent liability and how it all gets resolved really depends on your father's business structure and contract, is it a registered LLC? Has he renewed his registration each year? Does he have a different bank account for his business? Has he adequately separated finances so it can be determined what is business and what isn't? There are too many variables that need to be determined with certainty, not guessing. I recommend posting this to r/legaladvice but start looking into a lawyer soon.
The other responses below such as the landlord coming for your dad's assets or other remedies that he may pursue are all possible options and the only way to find out how much protection your parents have is to seek professional help.
Question asked by
July 13, 2020, 12:37:55 AM