Guarantor on Retail Lease for Shop
Last edited 18/08/2019 - 19:04 by 1 other user
My Girlfriend runs a small business & has done so for the last 2 years. The lease for the retail shop is coming up for renewal. Originally we signed the lease under a Company name. However, one of the caveats the agent/landlord required (Seeing there no real assets associated to the Company) was to make my Girlfriend and myself both sign not only as Directors of the Company, but, also as personal Guarantors. I've been told this is quite common. Also, for clarity both me and my Girlfriend are Directors of the Company that signed the lease.
To extend the lease I have managed to have it so that I will not be signing as a personal guarantor on the lease & only my Girlfriend will be a personal guarantor. We both however will still sign in the capacity of directors of the Company. Under this arrangement, if for example our Company was to default on the lease, they could only come after assets associated to the company & that of my Girlfriend (She doesn't have much in the way of assets overall anyway). They however would not be able to come after any of my personal assets & any income of mine that is not associated to the company.
One caveat they mentioned however is that if for example I wish to remove myself as a Director of the company in the midst of the signed contract the Landlord must agree to it, otherwise we would be breaking one of the conditions of the contract. If for some reason I wanted to do this, I highly doubt the Landlord would agree simply because they won't benefit at all from it.
Being a director of PTY LTD company, in what ways hypothetically am I exposing myself here? I'm thinking of thing such as Tax Liabilities etc. Would very much welcome other peoples opinions on this.
My concern is that if me & my Girlfriend split up in the future (Hopefully that won't happen), how am I exposing myself being a Director (Girlfriend is the other director) of the Company that has signed a 3-year retail lease?