Rent Coach: Protecting yourself from a corporate tenant
By Mike Akerly |May 17, 2012 - 10:25AM
Q. I own a building in Manhattan, and I have a rental applicant that would like to sign the lease in the name of a corporation. Is this something I should consider letting them do?
A. It is not all that uncommon for the tenant of a residential lease to be a business entity such as an LLC or corporation. However, there are a number of things that you as the landlord need to do to protect your interests.
You should insist that an actual person sign a personal guarantee making them liable for the lease in the case that the corporation does not perform its obligations (such as paying rent on time). The guarantor should submit a complete application, just as you would have any tenant submit to you.
You should also have a conversation with the renter to ensure that you both agree on the use of the apartment. For example, how often will it be occupied? Will business meetings be conducted there? Will they invite customers to the property or host social events on behalf of the corporation? How many residents will there actually be?
Although some corporate tenants plan to have a single resident staying in the apartment during the lease, it is not uncommon for a corporate tenant to use apartments as an alternative to a hotel for short-term stays. In that case, any number of employees may be coming and going throughout the year--a situation that may not sit well with you or your other tenants.
That's why it is particularly important that you agree in advance on who the specific residents will be. Their names should stated in the lease. You should request a basic application from each of them that includes their contact information and social security numbers.
Mike Akerly is a New York City real estate attorney, landlord, and real estate broker. He is also the publisher of the Greenwich Village blog VillageConfidential.
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