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Dealing with a commercial real estate tenant breach

On Behalf of | Jan 26, 2024 | Real Estate |

Many commercial property owners lease units to other businesses to generate income.

Commercial real estate transactions involve a series of agreements, and when a tenant breaches a property contract, it can pose challenges for both landlords and tenants alike. Understanding the steps to take in such a situation is important.

Identify the breach

The first step is to identify the breach of the property contract. This may involve a thorough review of the lease agreement and communication with the tenant to clarify any misunderstandings. Clearly outlining the specific terms that the tenant violated is important for addressing the issue effectively.

Practice clear communication

Open and clear communication is fundamental in resolving any breach. Engaging in a constructive conversation with the tenant can help shed light on their perspective and intentions. Landlords should express their concerns and expectations while giving the tenant an opportunity to explain their actions. A diplomatic approach may lead to a mutual understanding and potential resolution.

Document everything

It is important to maintain detailed documentation of the breach and subsequent communications. Keeping a record of all relevant documents, such as the lease agreement, correspondence and any evidence of the breach, can be valuable in case further action is necessary. This documentation serves as a reference point and may be helpful if the dispute escalates.

Negotiate a resolution

Exploring the possibility of negotiating a resolution is often beneficial for both parties involved. Landlords may consider proposing alternative arrangements or solutions that address the concerns of both parties. Finding common ground can help avoid costly and time-consuming legal proceedings.

Enforce contractual remedies

If negotiations prove unsuccessful, landlords can consider enforcing contractual remedies specified in the lease agreement. This may involve penalties, termination of the lease or other measures outlined in the contract. Adhering to the terms agreed upon in the lease can provide a legal basis for addressing the breach.

Terminate the lease

In extreme cases where resolution seems impossible, terminating the lease may be the only viable option. Follow the terms outlined in the lease agreement. Terminating the lease ends the contractual relationship and allows the landlord to seek a new tenant for the commercial property.

Addressing a commercial real estate tenant breach involves a systematic approach. Following these steps can help landlords navigate through challenging situations and maintain a healthy landlord-tenant relationship.

Founding Partners Damaso W. Saavedra and Allyson D. Goodwin