Boutique by Design. Execution by Discipline.
By Keith Alan Darby, CCIM
Most commercial leases signed by business partnerships start the same way: two people building something together, sharing the risk, confident in the future. The lease reflects that confidence, both names on it, both ready to stand behind the business.
What most partnerships don't plan for is what happens to that lease when the partnership itself changes. And the thing that decides how exposed each partner really is isn't the partnership at all. It's how they signed.
First, figure out who actually signed
This is where we see the most confusion, and it is worth being precise, because it changes everything that follows. We are brokers, not attorneys, but in the leases we review the answer usually comes down to one of two situations.
You signed on behalf of an entity. If your tenant is an LLC or a corporation and the partners signed as officers or members of that entity, the entity is the tenant on the hook. The individuals who signed are generally not personally liable for the rent. The business is.
You signed a personal guarantee, or signed as individuals. Most commercial landlords, especially for younger businesses, require the owners to personally guarantee the lease. Sign that guarantee, or sign the lease as individuals with no entity behind you, and you are personally on the hook, your own assets included.
The trap is assuming that because the business is a partnership or an LLC, no one is personally exposed. Pull the signature pages of your lease and any guarantee and confirm which situation you are actually in. If you are not sure, that is the first question for your attorney, and it changes how you should read everything below.
When you are personally on the hook, it is usually all of it
When two or more people are personally obligated on a lease, whether as co-guarantors or as individual co-tenants, it is almost always under what is called joint and several liability. In the guarantees we see, that language means each person is individually responsible for the entire obligation, not just their share.
In practice, if your partner stops paying their half, you do not owe 50 percent. The landlord can pursue either of you for the full amount, and is not required to go after you both equally or in any particular order. Your attorney can confirm how the specific wording in your guarantee applies, but that is the default we run into again and again.
This matters most when a partnership frays. In Miami, where so many of these partnerships sit in restaurants, food and beverage, retail, and professional services, spaces that turn over and reconfigure constantly, it comes up more often than partners expect when they sign.
The scenarios that catch co-signers off guard
Scenario 1: One partner wants out of the business.
Partner A wants to exit. Partner B wants to continue. The lease has three years left. Walking away from the business does not walk you off the lease. Unless the landlord formally releases Partner A (which the landlord has no obligation to do), a personally liable Partner A stays responsible for rent and operating expenses through the end of the term, business or no business. Getting that release is a negotiation, and one to bring to your attorney early.
Scenario 2: The business restructures, and this is where assignment and novation get confused.
Two owners operating as a partnership convert to an LLC and bring in a third investor. The lease is still in the original names. Here is the distinction that actually answers "what happens when a partner wants out," and the one we see blurred most often:
An assignment transfers the lease to a new party, but it generally does not release the original tenant or guarantor. If the new entity defaults, the landlord can still come back to the original signers. An assignment moves the keys, not the liability.
A novation replaces the original party with a new one and releases the original from future obligations. It requires the landlord's agreement, because the landlord is giving up someone it could otherwise pursue.
If a partner wants out cleanly, a novation, not an assignment, is what actually gets them off the hook, and the landlord has to consent to it. Have your attorney confirm which one your documents actually accomplish, because the two labels get used loosely.
Scenario 3: One partner's circumstances change.
Divorce, a health crisis, a sudden inability to hold up their half of the business. For most of these, the landlord does not care: the lease still says both parties owe the full amount. Bankruptcy is the exception, and an important one. When a partner files, the automatic stay generally halts collection against that person, and a discharge can eliminate their personal liability altogether. That does not make the debt disappear. It shifts the landlord's focus onto the co-signer who did not file, which is you. A partner's bankruptcy is exactly the situation where your own exposure can spike, so it is worth asking your attorney how your lease and guarantee would play out if it happened.
A strained conversation between two business partners. The kind of moment a lease's joint and several liability language makes far more complicated.
What to build into the lease from the start
The time to deal with partnership risk is at the LOI stage, not when the partnership is already in trouble. These are the provisions we push for on behalf of tenants, and the ones to have your attorney draft with care.
- A release mechanism: Language that lets one party be released on landlord approval if certain conditions are met: a track record of on-time payments, a replacement guarantor, an increased security deposit.
- An assignment and novation right: The right to assign or, better, to novate to a new entity or partner with landlord consent that "shall not be unreasonably withheld." Without it, any restructuring of the business starts from zero with the landlord.
- A partnership agreement that speaks to the lease: Separate from the lease itself, the partners' own agreement should spell out who carries the lease obligations if the partnership dissolves, and what happens to the deposit, the buildout, and the exposure.
- Clear succession language: If a partner dies or is incapacitated, what happens to the lease? A well-drafted lease answers that. Most, by default, do not.
A Miami commercial lease open to its assignment and release provisions, the clauses most co-signers overlook until one partner decides to exit.
The conversation most partnerships skip
Before co-signing any commercial lease, both parties need to answer honestly: what happens to this lease if we are not partners anymore in year two? If the answer is "we'll figure it out then," that is the moment to slow down.
A lease is a long-term commitment. A partnership is a relationship. The two don't always end at the same time, and the landlord is indifferent to which one breaks first.
Two Miami business partners having the proactive conversation about lease liability before signing, the step that protects both if the partnership changes.
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Disclaimer: This article is for informational purposes only and does not constitute legal advice. Joint and several liability, lease assignment and novation rights, bankruptcy treatment, and partner release provisions vary by state, lease structure, and individual circumstances. Always consult a qualified commercial real estate attorney before signing any commercial lease or guarantee.
About RISE Realty: RISE Realty is a Miami-based commercial real estate firm specializing in tenant and buyer representation, with a focus on industrial and cold storage real estate, across South Florida. RISE represents tenants and buyers exclusively, which means undivided loyalty on every deal. Our team is led by Keith Alan Darby, CCIM, President and Designated Broker of RISE Realty. The CCIM designation is held by a small fraction of commercial real estate professionals nationwide and represents the industry's highest standard of education and transactional expertise.
Keith Alan Darby, CCIM
President and Designated Broker | RISE Realty · South Florida Tenant Representation
Direct: 305-720-7925 · Office: 305-859-1606
Email: [email protected] Web: riserealty.com
Specializing in tenant representation for office, industrial, cold storage, and retail across Miami-Dade, Broward, and Palm Beach.
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