RENTAL AGREEMENT FOR OFFICE

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  1. #1

    RENTAL AGREEMENT FOR OFFICE

    Hi, I really need some help regarding my rental contract with my landlord, due to some financial crisis we hv decided to locate out of HK. we are currently on a 3 year fixed contract on our office permises which expires on 2010 March. We have explained situation to Landlord and was willing to give him a 3-4 months notice for him to find a new tenant but he still insists he cannot break the contract , if we break he will take legal action.I dont want to do anything illegal but maintaining this office is abig hit on my finance and i desperately need to move out. Any advice for me pls????


  2. #2

    Join Date
    Jun 2005
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    Hong Kong
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    Don't sign non-breakable contracts in future would be my advice.

    Liquidating the company would be the obvious solution, then there is no-one for the landlord to sue.


  3. #3

    Join Date
    May 2005
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    Has the rent for the office gone down since you took it on? If so you could use this as bargaining power. Maybe make a higher offer. Stress the fact that he will be receiving (some) rent for an empty office.
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  4. #4

    Join Date
    Mar 2008
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    My suggestions:

    (1) Check the lease if you can sub-lease the office. Normally there would be a clause allowing you to do this subject to the consent of the landlord which may not be unreasonably withheld. You of course would usually remain liable for any breaches of the lease by a sub-leasee so you need to pick carefully also.

    (2) Assuming the lease is in the name of a company, liquidating the company may or may not be of any assistance as: (a) the assets would need to be applied against the liabilites of the company (assuming there are assets); and (b) if you gave a personal guarantee to the landlord of your company's obligations under the lease then you will be directly liable for the same.

    You could otherwise try bluffing the landlord by saying you and/or your company are on verge of insolvency and that you are unable to pay anything extra (other than your offer), and that if he wishes to take legal action then there is nothing you can do to stop him - that way the landlord gets the idea that taking such action would be fruitless.

    Hope that helps.


  5. #5

    Join Date
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    Quote Originally Posted by big_panda:
    My suggestions:
    You could otherwise try bluffing the landlord by saying you and/or your company are on verge of insolvency and that you are unable to pay anything extra (other than your offer), and that if he wishes to take legal action then there is nothing you can do to stop him - that way the landlord gets the idea that taking such action would be fruitless.

    Hope that helps.
    This suggestion by Big Panda sounds good, OP you should try this. your planning on moving out of HK anyways.

  6. #6

    Join Date
    Mar 2006
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    4,043

    The suggestions by Panda and wtb are right on.

    Finding a replacement tenant is not a bad option as we are seeing this on this site for flats.

    How big and what cost are you looking at is key to the latter idea.


  7. #7

    thanks guys, I'm trying to convince my landlord for nominal rent for remaining period which they refuse, can closing a partnership company be helpful as its not a limited liability, If i close the company will they be able to still sue the partners.


  8. #8

    Join Date
    Apr 2004
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    hong kong
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    3,484

    I have personal experience of this type of problem but as a private limited company. Even then it was complete wake up call as to how landlords have the upper hand in these matters and needed a lot of devious ways and playing hardball to get out of the situation , which was not of my personal making. We had a JV and the partners basically dropped us in it financially. Our exposure was about 2 million HKD but we ended up paying 80K.

    The first question I would as is about your partnership. Is it a limited partnership and what does your partnership agreement say about liability?

    For our situation we started of as you have but in the end basically emptied the office and left the shell. It then became a legal back and forth with the management office threatening to wind up the company because they knew if that happened the directors would be only liable to pay HKD1.00. It is the knowledge of your liability that is your strength in this matter.

    PLEASE NOTE - If you just stop paying rent then they can apply an order to the court, without your presence or knowledge and send the ballifs in to seize all assets. This happens very fast so you need to protect yourself well in this situation, which has escalating costs.

    Be glad to offer any advise you need but you need to ensure your are protected within the law beforehand and this means making sure your partnership agreement is rock solid in your favour re liability. Suggest you get lawyer advise on this matter ASAP.