Keeping our clients informed is important to us so we regularly publish our thoughts on topics that will be of interest to anyone involved with commercial property. We call them ‘insights’ and we hope you find them of interest.

What if a tenant stops paying rent?

 

When you as a Landlord enter into a Lease Bureau Lease, you quite reasonably expect that in a worst-case scenario such as when the tenant stops paying rent, you will have plenty of options with which to pursue the tenant. As this is a pretty tricky area, I thought I would set out a few of the options that our Leases provide.

Here’s how it works: -

Firstly in our Leases, we set out 9 events that constitute a ‘breach’, such as late payment of Rent, failing to comply with the terms of the Lease, leaving the premises vacant for more than 7 days, etc etc.

Secondly, we provide the Landlord with the following options if the Tenant is in ‘breach’.

  • -Take back the Premises (in other words throw the Tenant out) and terminate the Lease.
  • -Take back the Premises but leave the Lease in place until the Tenant has remedied the breach.
  • -Convert the Lease into a monthly tenancy which the Landlord can terminate with one month’s notice.
  • -Distrain. (in other words, seize the Tenants equipment and sell it at auction to recoup outstanding Rent). Note that distraint is only available for non-payment of Rent and not other types of breach.
  • -Sue the Tenant for any loss or damage the Landlord has suffered or will suffer for the entire term of the Lease (provided the Lease hasn’t been terminated.

In all these scenarios there are certain procedural requirements that must be followed and quite a few traps for the unwary, so we always suggest that you get some advice before acting.

Whilst we can’t help if it ends up in court, we have put together a fixed cost procedure to assess the likelihood of success that you can take advantage of and that will get you through the first stages. We call it our ‘Default Assessment” and by the end of the assessment process you will know exactly what your options are and what the chances of success are before you head off to the Lawyers and potentially throw good money after bad.

Don’t hesitate to give me a call if you have any questions or want more info.

Regards

Steve Evans


 

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