Saturday, June 9, 2012

How to Handle Tough Tenants in Commercial or Retail Property

female person with raised hand
Control tough tenants
When it comes to managing and leasing commercial property, you will sometimes strike some really tough tenants that make the property management of the property really difficult.  They may do this for a variety of reasons, but the reality is that you do not want them to destroy the harmony in the property and the landlord’s property investment.  Control is the key to the solutions needed.

Typically these tough tenants will:
  1. Make it hard for you to handle maintenance matters in their location or within the property.
  2. Talk to other tenants about the property in negative ways thereby making your role as a property manager difficult with other tenants.
  3. Not tell you things that you should know about the property or their occupation.
  4. Go direct to the landlord on general matters rather than involve you as the property manager
  5. Not respond to leasing matters and your requests for tenancy information
  6. Not pay rent on time or in keeping with the rental invoices
  7. Not respond to your telephone calls or requests for a meeting on current issues
  8. Dispute the outgoings adjustments and notices that are served on them each month or year as the case may be.
  9. Not allow you to inspect the premises when required
  10. Fail to comply with the terms of their lease and occupancy conditions

So we call these people the ‘tenants from hell’.  There are lots of them around, so don’t feel that you are alone in the world.  There are some ways to handle the problem.

In most cases the only control tool you will have with this tenant is that of the lease for the premises.    On that basis you really do need to know the terms and conditions of each lease and the up to date factors of occupancy.  In some circumstances local laws and legislation may also have relevancy to the tenant dispute; get the facts and understand where you stand.

When you find that a tenant fits into this ‘difficult’ category then special attention is required.  Recognise that they can be a real source of trouble and on that basis exercise the lease terms with focus and accuracy.  Also watch the tenant occupation for changes and threats of change.  Visit the property frequently and give special attention to the space that this tenant occupies.  Look for situations of default under the lease.

When they do default under the terms of the lease, take immediate steps to challenge the issue in a legal and correct way.  Put everything in writing.  Get the landlord’s solicitor to issue notices of default under the terms of the lease, so that the tenant can see that their actions are being responded to in a firm and direct way.  Accuracy is paramount in the default process because at a later stage you could find that you are in court to defend your actions in the situations and events.  Notes and information will bolster your position when and if the matter reaches the courts.