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Guidance toward evicting a commercial tenant

On Behalf of | Nov 4, 2019 | Commercial Real Estate |

Your commercial property takes money to run and is meant to be profitable. One aspect of a smooth commercial operation is lawful, cooperative, and paying tenants. If a tenant isn’t paying their rent or has violated other terms of their lease agreement, consider eviction. Due to the time consuming and expensive task of removing a tenant, it should never be the first step. That said, take the legal steps to resolve the situation before officially pursuing eviction.

First, consider the tenant’s situation. Are they having money troubles that can be resolved over time? Has their violation been so egregious to warrant an eviction, or are you thinking irrationally? Do you have a replacement tenant available? Is the tenant likely to take you to court?

Also, consider these options in the name of your business, as your business is what you’re protecting.

All tenants have some fundamental tenant rights, but there are certain rights that commercial tenants do not have. These rights can differ by state, which is where an attorney experienced in business and real estate law can come in handy. They can assist you in filing your eviction order, advise you on your rights, your tenant’s rights, and how pursuing an eviction can impact your business. The impact will differ whether the business is a partnership, a corporation, or the lease included a personal guarantee by you, the commercial owner.

Has the problem tenant filed for bankruptcy?

Another situation in which an attorney could benefit your eviction pursuit is if the tenant had filed for bankruptcy before or after the eviction process began. Federal bankruptcy law states that if a tenant filed for bankruptcy prior to the commercial owner pursuing eviction, an automatic stay would be put in place favoring the tenant that protects them from a landlord’s termination notice or eviction.

However, if the landlord can persuade the bankruptcy court to lift the automatic stay, which would be determined on a case by case basis, the eviction process can proceed. If bankruptcy is filed after the eviction process has begun, the tenant must comply. Some states allow the tenant extra to pay the debt before they must vacate the space. If the bankruptcy judge grants this allowance, it will occur at the eviction hearing.