Bad Payment Discipline Trouble: 4 Dos and Don’ts of Evicting a Commercial Tenant
When you feel you must evict a commercial tenant, chances are you have both reached an impasse, Chances are the tenant is also ready to hunker in and push back. So you should do it right.
If you’re new to these problems or an old hand, you cannot underestimate the need to review the requirements. They will vary state to state, and sometimes locale to locale. You’ll want to know the inside and outside of applicable Landlord and Tenant regulations and/or trust an attorney to manage the eviction.
Forbes warns, “There are many different commercial leases and terms, but you’ll find that the devil’s in the details.” That concern goes for tenants and landlords. So, if you foresee the need to evict your commercial tenant, you’ll want to organize your thinking well in advance.
4 dos of evicting a commercial client for bad payment
Failure to pay rent as contracted is the simplest and clearest reason to evict. There’s not much ambiguity to not paying the rent.
Do get the paper together. You cannot trust your memory when it comes to bookkeeping. There are software aids and apps to sort and archive the records on leases and documentation. You need the means to verify and double check the terms of the lease, the tenant payments, and landlord expenses.
Leases may include grace periods, late fees, or other provisions allowing the tenant some leeway on payment. This may be complicated for landlords who have multiple commercial properties or multiple tenants in the same building under different arrangements. In any case, landlords must maintain related records and present them in an orderly way when needed.
Do maintain tenant relationships. Commercial property landlords are in business. They make money as a return on investments they make in commercial real estate. In time, they run into all sorts of tenants, but they enjoy rights to their rents under the law. They should not take these experiences personally nor should the violating tenant.
Landlords stay way ahead of the game if they treat their tenants—even those who have failed to pay—with decency. Often the tenant has done everything possible to honor their deal. More important, you don’t want to sour relationships that could turn on you. If you understand your rights under the law and within the lease, you can remain firm and consistent in the application of your policies.
Do give good and final notice. Most laws and leases required notice of the intent to evict. Any such notice must include detail in confirmation with the lease. The notice must include the tenant name and address as specified in the lease. It should itemize the violations in detail and connect them with terms of the lease. And, it must include the number of days within which the tenant must comply or “quit and deliver possession of the premises.”
For the records, you must sign, date, and secure proof of service. Such notice differs from eviction for violating other terms of the lease or for causing severe and repeated damage to the property or rights of the tenant.
Do document everything. You should document every contact with the tenant from your first contact on. A good record will include evidence of meetings, correspondence, phone calls, and emails. Such records are important even for tenant relationships that present few problems. The more information you have the better prepared you will be to manage the eviction.
This file may include payment records, contacts made, warnings sent, and requests to enter the unit as defined in the lease. It should also include tenant complaints made and addressed. But you can visit the website for a landlord attorney for the peace of mind you won’t get from record keeping or the best Customer Relationship Management software.
4 don’ts of evicting a commercial client for bad payment
When a tenant fails to pay as agreed, the landlord does have an upper hand. But you can also make mistakes that complicate the eviction and increase your costs.
Don’t do-it-yourself. Tenants have no right to take things into their own hands. You cannot show up, harass, coerce or intimidate the tenant. You may not turn off their utilities or access.
Your attempt at a self-help eviction may lead to violence, but it will certainly improve the tenant’s legal defense. The best practice requires following advice from your lawyer and complying with laws calling for the service of court orders by the local constable or sheriff.
Don’t forget the evidence. You can make any claim against the tenant, but if you don’t have the evidence of policy violation, you weaken the claim. It’s the landlord’s duty to present proof payment has not been made as agreed. You may need bank statements, receipts, deposit slips, and more.
You may be required to present the signed lease agreement, a copy of the “notice to quit,” all communications between landlord and tenant, and more. Without full and related evidence, the tenant foregoes the advantage and prolongs the process adding your expenses.
Don’t assume you can do what you want. Landlords may own commercial property, but contract law still restricts their rights. You cannot evict at will. You may evict for failure to pay, but you must act within the law. With or without the retained services of an attorney, you should not proceed with eviction without legal advice.
Depending on the location and the case load in the area, you will wait your turn to secure what you need to evict. Having things ready will help move it along, but you cannot speed things up by doing things your way. For instance, you don’t want to make a deal with the tenant on the side. Offering to accept the keys instead of money isn’t wise, but if you will to negotiate, you should have your attorney do it for you.
Don’t get behind. The missed rental payments issue may seem cut and dry. But if the tenant is having trouble making ends meet, this may raise some other red flags. They, for example, may have gotten behind on their side of the care and maintenance understanding. They will be quick to take the position that you did not honor your duties, so you must show you have.
Since the process could take months, you also want to confirm they have not damaged the premises during that time. You might even build a regular building inspector inspection into your lease arrangement.
A final note!
If’s not easy being a commercial real estate landlord, but it’s a tremendous financial opportunity when you do it right. So, don’t even think of leasing to friends or relatives without legal advice on the pros and cons. And, as Huffington Post says, “Choose a real estate lawyer who’s very experienced in commercial lease negotiations, and with whom you feel comfortable.”