Your Tenant Is in Default, But the Entity Does Not Exist

More often than you might think, landlords enter into leases with tenant-entities only to find later, when the tenant defaults under the lease, that the tenant-entity was never lawfully formed or did not exist at the time of entering into the lease. The tenant might be anxious to finalize the lease and is in the process of forming a single-purpose entity, but has not completed that process for one reason or another. The parties might be hasty and not as diligent as they should be with regard to the formalities of the transaction and the signatory executes the lease on behalf of an entity that does not yet exist. Does this mean that the landlord has no remedy? Not necessarily. In fact, under promoter liability law, such a situation may provide a better potential for recovery than if the entity did exist!