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Commercial Litigation Landlord Tenant Law Litigation

‘Shell Game’ Gets Away From Commercial Lease Guarantor

In the real estate business, as in many others, the question of just who is contractually responsible when things go wrong is a recurring one, particularly when a closely-held corporation or other business entity is involved.

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In the real estate business, as in many others, the question of just who is contractually responsible when things go wrong is a recurring one, particularly when a closely-held corporation or other business entity is involved. If rent goes unpaid, is the business’ proprietor on the hook, or the corporation of which he is the sole owner? Or when a guarantor fails to come through after a lessee defaults, can he and his business entities be treated as one in the same, so that satisfaction can be had through attachment of the company’s assets? A scenario similar to these played out in case recently decided by the Appellate Court of Illinois, First District, Second Division: Golfwood Square LLC v. O’Malley, 2018 IL App (1st) 172220-U (8/11/2018). In Golfwood, the court had to decide just how much responsibility a business entity could be made to shoulder that was not directly involved in a dispute between a commercial lessor and the guarantor of its lessee’s contractual responsibilities.

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