Most businesses, unless they own the property in which they
operate their business lease the premises they conduct their businesses out
of. A commercial lease can be quite daunting
to a small business owner and can go on for pages. Most people simply look at the basic terms (how
much the rent is and when it is due) and simply sign what is put in front of
them. And most tenants do not really understand
the extent of their liability to the landlord if they leave the premises early
– say if the business fails. Unless the
lease provides otherwise (and they never do) a landlord whose tenant has left
before the lease term has expired is permitted to sue the tenant for the amount
of future rent the tenant was required to pay under the lease less whatever the
landlord collects from new tenant for that same period less other expenses associated
with reletting the premises.
The
landlord is required to mitigate his damages by taking commercially reasonable
steps after his tenant leaves to locate a new tenant. In a market where rents are rising, a
landlord might end up leasing the premises for more than the prior tenant paid
and under certain scenarios the prior tenant may not end up owing the landlord
anything. In a declining or stable
market that is never the case. In
addition, commercial landlords often will require a personal guaranty from the
principal(s)/owner(s) of entity tenants.
In those circumstances the landlord can pursue not only the entity but
the person who guarantied the lease unpaid rent.
Contact Laurie Murphy
The best salesmen in the property industry are knowledgeable and competent at renting residence. In all cases of professional investment residence it is the rental that brings actual value and benefit to the homeowner.
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