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Commercial real estate: Dealing with nonpaying tenants

| Feb 12, 2021 | commercial real estate |

As a commercial landlord, you might find yourself wondering what to do if a tenant fails to pay their lease in a timely manner. It may seem like the right thing to do is to restrict the tenant’s access to the property, however, doing so can lead to additional legal concerns that are best avoided at all costs. 

It is important to establish a resolution process in advance of leasing any property out. Commercial landlords can take the following actions to minimize the risk of nonpaying commercial tenants. 

The legal eviction process for landlords with nonpaying tenants

It may seem tempting to take matters into one’s own hands and change the locks or toss out the tenant’s equipment and belongings. The law requires commercial property owners to seek legal action against commercial tenants who fall behind lease payments. In order to meet filing requirements, commercial landlords must certify in the complaint that they are indeed the owner of the property, the property’s address and include the rental/lease agreement. The complaint must outline all financial or fee transactions that the tenant is in arrears on and the amount that is necessary to cure the default. 

Before the courts issue a writ for possession, commercial tenants have the opportunity to retain their tenancy by paying what they owe by the end of their court date. Another alternative is to negotiate/mediate for potential solutions to help cure the default, such as a lesser amount or payment agreement and if possible, prevent eviction. Also, tenants may appeal the court’s decision if they believe they have a defensible reason for nonpayment, such as serious illness, hospitalization, etc. If the tenant is unable to honor their lease obligations and pay their rent, the courts will issue an eviction ruling that includes the amount of money owed. If the tenant fails to vacate the premises within 10 to 30 days, the landlord can request in writing a warrant of removal to have them forcefully removed by law enforcement.