12 Sep When a commercial tenant goes out of business
If you own commercial properties and lease to tenants, everything may be going smoothly until you hear one of your tenants is going out of business. Where does that leave you?
It means you now have a vacant property and you won’t be able to rent it out again until the lease is resolved. In order to show the lessee no longer has an interest in the property, you’ll have to either wait until the lease expires (collecting rent from the ex-tenant, if possible) or terminate the lease early if you have a willing new tenant to take over. This can take some time, and, in the meantime, you could lose valuable income if the former tenant is in bankruptcy or otherwise unable to pay.
If your lease agreement does not allow for early termination, the tenant cannot break the lease without liability. This means that legally, the tenant cannot break the lease even if the business fails and the business owner has vacated the property.
Additionally, if your tenant has vacated the property and still owes you back rent, you’ll have to pursue collection, which can be time consuming and frustrating. If the deposit doesn’t cover the back rent due, you may have to sue for the money owed. Any collection efforts will have to follow the laws of your state and the terms of the rental agreement.
Of course, you would like to believe that all your commercial tenants will do the right thing and pay the rent even if the business has closed. Unfortunately, this may not be the case.
Our real estate attorneys can advise you on legal remedies if your tenant has gone out of business and can help you find solutions for collecting unpaid rent. We handle all legal aspects of real estate and are ready to assist you. Contact us for a consultation. http://www.barsh-cohen.com/