Tactics used by tenants who fail to pay the rent is a way of turning the tables and claiming failure to pay is the landlord’s fault.
- One issue is building maintenance and repair
Such a claim will not relieve the tenant of its obligation to pay rent, it will complicate an action to evict and collect the amounts owed.
The landlord can avoid this complication by promptly responding to tenant complaints and maintaining its premises throughout the course of the lease.
- Sometimes it is the tenant who has caused damage to the premises or that is conducting activities in the premises that may be hazardous or cause damage.
In these instances, the landlord often must seek immediate court intervention to close the tenant’s business, prevent further damage and collect the costs of repairing the damage.
- Tenant mix when one tenant disapproves of another tenant in the same commercial center.
The landlord then leases space in the same center to two businesses; and one sees themselves as a competitor in the same market or industry.
From a legal standpoint, the landlord is within its rights, but from a landlord/tenant relationship standpoint, it’s an unfortunate situation for all involved.
If the landlord had known that the tenant that has the longest lease in good standing would object, he/she might not have leased to the new tenant. Unfortunately after a lease is signed, it’s an iron-clad contract, putting the landlord in a difficult situation.
When tenants turn the table on their landlords it will sometimes take the threat of court-ordered eviction to make tenants pay and live up to their lease obligations. The court system can be used by landlords to obtain settlements and consent judgments.
Problem tenants can affect your reputation as a commercial real estate investor even if the settlements and consent judgments are not dealt with in an amicable fashion.
To avoid the cost of lawsuits, landlords can attempt to negotiate mutually acceptable terms to allow delinquent tenants can become current on their lease obligations.
Preemptive action with a well-drafted lease will address most problems spelling out in detail what circumstances will constitute an event of default under the lease.
Landlords should get detailed financial statements from prospective tenants to ensure payment from corporate tenants and written personal guarantees from the individuals who own the corporation or other entity that is the named tenant.