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Real Estate Q&A: Leases are voidable by a non-signing spouse

Posted by   /  January 11, 2017  /  No Comments

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Adam D. Martinez | Chairman of Real Estate Litigation Department

Question: I am a broker and represent the owner of a commercial building in a lease transaction. The owner is a married couple. However, the wife is a neurosurgeon and I have never met her before. The husband is the only person I have worked with regarding the lease and building. In preparing the lease, the husband has asked that only his name be included as he handles all of their commercial real estate holdings and his wife is hard to involve due to her schedule. He also said that a previous attorney informed him that both spouses do not need to sign a lease in order for it to be valid. The tenant, however, is insisting that his wife must also sign the lease. Who is right?

Answer: While it is true that one spouse can generally enter into agreements on behalf of the other, under Arizona law both spouses’signatures are generally required in real estate transactions (this rule also applies to personal guarantees). The only exception is for leases of less than one year.

Here, the lease is for more than one year. Therefore, if the tenant wants to protect its business and its right to possess the property during the lease term, both spouses must sign the lease. Otherwise, the wife would have the right to void the lease and evict the tenant at any time (a lesson southern Arizona’s Geronimo Hotel & Lodge learned the hard way). Additionally, if husband ever breached the lease and the tenant sued for damages, the tenant could only obtain judgment against the husband and the husband’s separate property. If the husband has no separate property, then a judgment against him might be worthless.

Adam Martinez is the Chairman of the Real Estate Litigation Department at Rose Law Group pc., and can be reached at amartinez@roselawgroup.com.

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