This week's emails are all from small businesses negotiating leases for retail and office space.

"My company has an opportunity to lease space in a large office tower in our city — a very prestigious address.

"The problem is that we can only sublease the space. The current tenant is having financial problems and no longer can afford the space. The landlord will not let this tenant off the hook but will let them sublease to us. We would pay our rent each month to the tenant, and they would pay the money to the landlord a day later.

"We're in good financial condition, but we're nervous that we might lose this space because our 'landlord' (the prime tenant) defaults in their obligations under the lease or goes bankrupt.

"Is there any way to solve this problem so we can move forward?"

There are several ways to deal with this in the sublease document.

A "Right to Cure" Clause. If the prime tenant were to fail to pay rent on time, the landlord would notify you and give you one or two business days to make the payment and cure the default. You would then have a lawsuit against the prime tenant to recover the first payment.

An "Attornment" Clause. The prime tenant would assign the rent obligation to you with the landlord's consent. Your company would pay the rent directly to the landlord, with the prime tenant standing as backup in case you miss a payment or otherwise default under the sublease.

An "Indemnity" Clause. The prime tenant would indemnify you for failure to remit the rent payment to the landlord on time, with a penalty (most commonly one year's rent) if you should lose the space as a result.

A "Quiet Enjoyment" Clause. This allows you to stay in the space even if the prime tenant were to default or file bankruptcy, as long as you can prove that you made the payments to the prime tenant.

"We are the U.S. branch of an Asian retailer, and have found the perfect space for our first store in the U.S. The problem is that we have been in business for only a year and do not have the financial strength the landlord wants — all of our operating funds right now are being contributed by our corporate parent in Asia.

"The landlord has asked our parent company for a corporate guaranty of our lease obligations, but our parent cannot give this guaranty because doing so will expose them to U.S. tax liability. As a U.S. company we will of course pay our taxes, but the whole purpose in forming our company was to insulate our parent's worldwide income from U.S. taxes.

"The space is too good for us to give up. Is there any easy solution to this dilemma?"

Overseas companies setting up operations in the U.S. will frequently form a U.S. subsidiary (most commonly in Delaware, and most commonly as a regular or C corporation) to conduct their business here. The reason is that U.S. tax law sometimes taxes overseas companies not only on income from their U.S. operations but also on income generated outside the U.S.

If the parent were to guarantee its subsidiary's debts in the U.S., that could constitute nexus, exposing the parent to U.S. taxes. But there is an easy way out here: the standby letter of credit, which has been used in international finance transactions for generations.

Here's how it works: The Asian parent would establish a standby letter of credit with a U.S. bank in favor of the landlord. If your company were to ever default on its rent payment, the landlord would contact the bank and collect the overdue rent under the letter of credit. The parent company would be obligated to reimburse this amount to the bank — with interest, of course — under its agreement with the bank.

Because the Asian parent's obligation is to the bank, not the landlord, a standby letter of credit does not create nexus in the U.S. Most landlords will favor this arrangement because it makes sure they get paid on time without having to bring costly lawsuits or eviction proceedings against their tenants. If the parent company wires enough money to your company each month for you to make your rent payments on time, there will be no need for the landlord to call on the standby letter of credit. It's a win-win all around.

"I just signed a lease for retail space. The landlord gave me the first three months rent-free so I can complete my buildout of the space but has started sending me bills for taxes and operating expenses. Can they do that?"

Unfortunately, yes. When a landlord grants a rent-free use period, it usually applies only to your monthly base rent. Additional rent, such as taxes, insurance and operating expenses, are not forgiven during this period, as these amounts come directly out of the landlord's pocket.

Cliff Ennico ([email protected]) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our webpage at www.creators.com.