Company Let yet not a LIMITED Compay

[ohdearme]

Hello, I have just joined in the last five minutes.

I have to choose a residential letting agreement for a reputable charitable organisation, who have a family moving in. They want a company let as they may change occupiers.

I am very happy with all this but as they are not a LIMITED Company, is a company let agreement correct, or am I splitting hairs?

Thank you in advance

Alan

[dominic]

What matters is that the tenant is not an individual, otherwise (usually) the tenant would benefit from the agreement being construed as an Assured Shorthold Tenancy.

If the tenant is not an individual, this will allow you to use a bare contractual tenancy as your template tenancy agreement, which sometimes entitles the LL to better rights than under an AST.

By the by, bear in mind that the constitution of the tenant organisation may be a limited company, as some charities are formed as companies limited by guarantee (and some even have permission to omit the word "ltd" or "limited" as the suffix to their legal name).

[theartfullodger]

With charities I deal with I always check with 't Charity Commission (as I do companies with Co House) & see if they really are a charity & if they file their accounts on time... when they ain't/don't you worry... if they ever pay their bills on time

see.
http://www.charity-commission.gov.uk/
"Search the Register of Charities"

Cheers!

Lodger

[PaulF]

If the tenant is not an individual, this will allow you to use a bare contractual tenancy as your template tenancy agreement, which sometimes entitles the LL to better rights than under an AST.

If you word the TA well enough there is nothing to worry about. You need to have it exempt from the L & T Act 1954 by serving Notice and having the tenant company sign it. Make sure the person signing the tenancy agreement has an authority to do so i.e. See a copy the charity's charter or similar.

[Snorkerz]

Worth remembering that LTD isn't a sign that they are legit - in fact what it means is that if it all goes belly-up their liability to you is LIMITED.

On the other hand, with a non-limited company, if the same thing happens you can pursue the owners of the company through whatver legal channels you want to get your money.

That's a bit over-simplistic, but remember LTD means their liability to you is LIMITED

[jeffrey]

Worth remembering that LTD isn't a sign that they are legit - in fact what it means is that if it all goes belly-up their liability to you is LIMITED.

On the other hand, with a non-limited company, if the same thing happens you can pursue the owners of the company through whatver legal channels you want to get your money.

That's a bit over-simplistic, but remember LTD means their liability to you is LIMITED

No. That's clearly wrong. Every company, like every adult individual, has unlimited liability to outsiders, unless outsider contractually agrees otherwise.
What 'limited' means for a company is that its members' liability to outsiders (in case of co. not being able to pay its debts) is limited to:
a. what they paid for shares (if co. is limited by shares); or
b. the amount of their guarantee (otherwise): typically a nominal £1, for a non-profit company such as a leaseholders-owned Block of Flats company.

[Snorkerz]

No. That's clearly wrong. Every company, like every adult individual, has unlimited liability to outsiders, unless outsider contractually agrees otherwise.
What 'limited' means for a company is that its members' liability to outsiders (in case of co. not being able to pay its debts) is limited to:
a. what they paid for shares (if co. is limited by shares); or
b. the amount of their guarantee (otherwise): typically a nominal £1, for a non-profit company such as a leaseholders-owned Block of Flats company.

Well, I'm not going to argue the legals with a lawyer - but

Realistically, once Joe Bloggs Ltd bank account is empty and the assets are gone there is no more money to be had. However if Joe Bloggs Properties (sole trader) owes you money and his business account is empty or he stops trading there is nothing to stop you going after his personal funds too, which is why banks usually want personal guarantees before lending to small Ltd companies.

This is how companies close down owing £000s and then the same people open up new companies in the same buildings with similar names, owing nothing.

[jeffrey]

Really, there's no difference between an insolvent individual and an insolvent company. Creditor can claim against debtor, in each case, to full extent of assets. It's just that a company's assets may include its director's too (as guarantor); but, then, an individual's guarantor is no different.

[dominic]

Jeffrey is correct, but I think the point Snorkerz is making is the difference between the practicalities of liability of a legal entity vs a natural person (who is also a legal entity but who has a personal life outside his legal existence).

A limited company sole existence is to serve the purpose set out in its memorandum of association. It does not have a "life" in the human sense. Therefore in practice, suing a (limited) company means that there is no notional division between that entity's "business" and "personal" funds, because there is no "personal" side to the entity's existence.

Accordingly an individual, when held liable, is liable to the full extent of its personal as well as business existence. Something which cannot be true of a soulless legal entity alone.

[Paragon]

Since they are not a limited company - is it possible that it is a "trading name" company only - in other words, not a real company?

I once had a "company let" in which the company used a relocation agent. The contract came back from the relocation agent signed only by the company employees as individuals, so not really a company let. They turned out to be great tenants, especially since they were computer experts and helped me out quite a bit with my computers.

[jeffrey]

Note: some companies are limited/plc; some are not. Verify at Companies House.

[dominic]

Note: some companies are limited/plc; some are not. Verify at Companies House.

...And some limited/plc companies trade under a different name, even though the contracting entity is the company. If this is so, they are usually required to mention their actual entity name on all documents and correspondence.