How to deal with a tenant who is(finished)


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How to deal with a tenant who is(finished)

  1. 1. How to Deal with a Tenant Who IsDelinquent
  2. 2. There could be legitimate circumstances thatexplain the delayed payment by a tenant.
  3. 3. As a commercial landlord, youdepend on tenants makingtimely rental payments. Afterall, you need the money to paythe bills that you have. When a tenant fails topay on time, it affects the landlord’s ability tocover their financial obligations for that specificproperty.
  4. 4. With the financial downturn affecting businessesacross North America, commercial landlords haveto be aware of what their options are to remedynon-payment of rent. There are a number of stepsthat commercial landlords would be wise to follow.Commercial landlords would be well advised tocontact the tenant to see why they are late on therent.
  5. 5. There could be a legitimate circumstance thatexplains the delayed payment. A death in thetenant’s family could also be having an impacton the ability of the businessto operate. The possibility ofa workplace accident cannotbe ignored. A workplaceaccident could result in ashutdown and loss ofbusiness-relatedincome for thetenant.
  6. 6. By contacting the tenant,the landlord has anopportunity to makearrangements with thetenant to correct thepayment problem. Following this method avoidscostly legal entanglements and allows bothparties to reach an equitable solution to theproblem. The other benefit is that the landlordalso avoids the cost involved with advertising,interviewing and approving a new tenant.
  7. 7. Distrain is a term that meansseizing the tenant’s propertyto recover rental arrears.Seizing a tenant’s chattels isa complex process for alandlord to undertake. Thisprocess needs to be carefullyundertaken in order to makesure that the tenant’s right touse and enjoy the premises isnot breached by the process.
  8. 8. The landlord is required toprovide the tenant withnotice, informing the tenantof the intention to dispose ofchattels to cover the rentalarrears that are owed. Theprocess usually requires twoindependent appraisals of thechattels after a pre-specifiedperiod of time. The sale of chattels may, or maynot, cover all expenses and rental arrears.
  9. 9. If the sale does not cover the arrears, thelandlord must sue the tenant to recover theremaining rental arrears. If the tenant informs acommercial landlord that he or she can nolonger afford to lease the space, the landlordmust decide whether to accept the fundamentalbreach or refuse it. Either way, the landlord willpotentially have to go through the process ofsuing the tenant to recover any of the lost rentalincome.
  10. 10. Commercial landlords need to carefully weightheir options when attempting to recover lostrental income. The best solution is often to finda way to work with the existing tenant to resolveany arrears before legal action is taken. In theevent a landlord’s best option is to pursue legalrecovery of rental arrears, then they will have toweigh their legal options.
  11. 11. Randy