Business Law Breakdown: Commercial Leasing and Tenant Relations

What do you do as a commercial landlord when your tenant doesn’t pay?

First, hopefully, you have done your work on the front end. Residential leases are often pretty standardized, don’t change much, and include stronger statutory protections for tenants. Commercial leases are much more complicated, there are many more clauses to filter through and many more conditions to deal with. This can lead to the temptation to skirt over some of the clauses that deal with termination or contingencies that you may not believe will take place. You do not want to take a shortcut on these clauses. Make sure you deal with everything up front to make it easier even if it seems unlikely because in many cases disregarding some of the contingencies can come back to haunt you.

You can always go to court. You can file a lawsuit for damages without evicting your tenant, or go through the legal process to get a court-ordered eviction. But court can take months, often more time than is cost-effective or fits the situation. Texas is one of about twelve states that allows a commercial landlord to make use of what are called self-help remedies. If you have included it in your lease, then as long as you don’t breach the peace and you follow the requirements of the law, you can change the locks and immediately retake possession of the premises without the hassle of court.

A lock-out will get your tenant’s immediate attention and can be your best leverage, but you should be careful when taking such a decisive step. If you do not follow the letter of the law and the terms of your lease, you can find yourself in litigation for not following statutory and contractual rules.

Even if you follow the lease provisions and the law correctly, you may still end up in court pursuing your tenant for unpaid rent or other damages. But, if you’ve retaken possession of the property, you can begin the reletting process to get back to where the property is making you money.

If you have additional questions about this subject you can contact Richards Rodriguez & Skeith.