Dealing with problem tenants

Date: 24 October 2017
Most retail tenants are at the mercy of the fluctuating economy. When the economy is flush, business is great and cash is flowing, but the reverse is also true. If your tenants are running a business that is going slowly, cash for rent may not be as available as when the times are good.
 
The problem however lies in the laps of both the tenants and the landlord. If a tenant cannot pay the rent and the landlord is acutely relying on the rent, then the landlord may need to evict the tenant. Nevertheless, finding reliable tenants can also be a difficult task for the landlord to fulfill. So it is not as dichotomous or simple as not paying rent and being evicted. For example, if a tenant is seen to be making every effort to meet their rental obligations then eviction may not be the only course of action.
 
As a long-term tenant who is trying to pay the rent, there is a good chance they will be able to catch up on past due amounts given a little time. It may be in the best interest for both parties to hold off on evicting a tenant until it becomes clear that the rent won’t be paid at all. In general terms a well-drafted lease will mitigate most problems landlords may come across. However, there are times that a legal agreement may not cover you.
 
What tenant issues should landlords look out for?
 
Firstly, you should assure you provide the best services to your tenants. If you have been slow, or refused to respond to a request for repair, then your tenant may have grounds to refuse to pay the rent. While this claim generally will not relieve the tenant of their obligation to pay, it will complicate the action to evict and collect any rent outstanding.
 
How can problems be fixed before resorting to eviction?
 
Assure you have an amicable landlord/tenant relationship. Both parties want the business to succeed, the tenant is renting a property off you to pursue their goals and if they achieve these goals they can afford to pay rent. It’s a win-win for both parties. Ensure you find a solvent, reliable tenant by completing due diligence.
 
What actions can landlords take to avoid issues in the first place?
 
When you are considering tenants you should have a process of identifying your best available option. Make sure you meet with the tenant to ascertain the below:
 
  • Has your tenant rented a commercial property before?
  • Do they have a positive reference from previous landlords?
  • Have you spent time researching their business?
  • Is their business a franchise or a stand-alone? If it's a franchise, what support will they receive from their headquarters with their franchise agreement?
 
Make sure you have an experienced property manager in place when you are searching for a tenant in the first place. Not only do professional commercial companies know local, state and commercial laws, but they can help create solid lease agreements and ensure tenants adhere to lease clauses such as rent collection, eviction, and fit out processes.
 
Setting yourself up in the first place to handle possible problems is always going to help mitigate any fallout if they happen to arise. At the end of the day, having a good open relationship with a tenant means you’ll both have a better experience in the long term.
 
Source: commercialpropertyguide.com.au
Back to articles Filed under: Media / National News Tags: eviction, problem, rent, retail, tenants
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