By law, corporations are recognized as legal entities separate from their owners. Because corporations are legal entities and CEOs manage them they're allowed certain privileges in executing their duties. Due to their positions, for example, chief executive officers are allowed to enter into contracts on behalf of their companies. Contracts that CEOs may execute for their firms include a variety of leases, including for apartments and other rental residences.
Corporations and Contracts
Corporations are recognized as "persons" under the law. As a legally recognized person, a corporation has the right to enter into contracts similar to the way an individual does. Corporations can also open bank accounts under their names or obtain lines of credit or enter into other types of financial arrangements. Many corporations also lease apartments and homes on behalf of employees and executives, with CEOs sometimes signing those leases.
Lease Agreements and CEOs
As the CEO, and as established in the corporate bylaws, you act in a fiduciary capacity on behalf of the corporation when signing contracts. CEOs usually must obtain the consent of the shareholders of the companies they manage before they enter into lease agreements, however. Once authorized, CEOs are able to lease homes or apartments for their firms' use but they must take care not to commingle their personal leasing activities with those of their firms.
Responsibilities of Corporations
Entering into a lease agreement for a residence requires that a CEO's company establish a corporate use for the dwelling. Recognized corporate uses for leased dwellings include temporary housing for traveling executives. If a residential lease is under a corporation's name the landlord must recognize the business as being responsible for paying the rent. If a corporate-leased residence is occupied by an employee noted as being responsible for paying the rent, the landlord can still require a corporate guarantee should the employee default.
Benefits of Incorporation
A major benefit to incorporating as a business is that shareholders and corporate officers are protected when their corporations experience trouble. As a shareholder or officer of a corporation your personal assets and liabilities remain separate from that of the corporation. If your corporation defaults on a lease agreement, for instance, a creditor cannot pursue you the CEO for the balance of debt. Contracts executed on behalf of a corporation become the corporation's responsibility, not the CEO's or other designated corporate signatory's.