Rental Agreements – Potential Liability Traps

Rental Agreements, if  done improperly, can become death traps for businesses.

Rental Agreements, if done improperly, can become death traps for businesses.

Ideally, all business ventures should be established within the legal framework of a company, or a corporation.

It is the only reasonable way to maintain liability issues within the company and away from the owners.

The importance of establishing a legal framework will prevent serious consequences to the owners should the venture fail.

Consulting a qualified Florida Real Estate Law Frm when ready to sign any Rental Agreement is of utmost importance.

Should you decide to go on your own however, here are few basic rules to consider:

  • Keeping Liability within the Company – When renting office or plant space for any  business, new or old, always sign the lease in the name of the business only. Otherwise, should the venture fail, the liability will  fall on the individual owners for the duration the rental agreement.


  • All Correspondence Must be Addressed to the Company Name – The rental agreement and all relevant documents should only be addressed to the company, not the individual. While it may seem harmless enough, using a personal address may  have serious consequences in case of  default. After signing a contract, should the landlord send letters to any address other than the established in the contract, such letters should be returned to sender unopened.


  • Avoid personal guarantees whenever possible – It may be difficult to do, as most landlords want to ensure that their rent will be paid for the duration of the lease. Signing a lease in an individual’s name potentially may lead to financial ruin.

It defies common sense to create a corporation or a limited liability company and then offer a personal guarantee. Again, the advice of a lawyer will certainly avert disaster.

There are requirements under Florida Law that landlords must meet in order to have a valid lease or rental agreement. Among them are to disclose the identity of who is authorized to act on their behalf.

In their simplest form, a rental agreements can be  letters that state clearly all the obligations and rights landlords and tenants have, and discloses details such as where and how security deposits must be held. However simple contracts such as this may lend themselves to confusion or misunderstandings. For that reason alone, a contract drawn to specifically address al the  needs of both parties should be drawn.

Remember: Lease or Rental Agreements are designed to protect both parties, therefore a qualified real estate law firm should always be consulted.




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