Rob Cassam's Commercial Leasing-Purchase Blog

A question I am often asked with respect to leasing commercial property is how one can know if the landlord is paying his bills.

Think about it for a second, if the landlord fails to pay his mortgage, taxes, utility bills or any similar related expense, those vendors who have not been paid can (and will) take legal action. That action can be anything from foreclosure, to disconnection of services.

So what can a tenant do?

Enter a good real estate attorney. Assuming the tenant used a tenant rep broker to assist him with the transaction, that broker would have negotiated important lease terms in the form of a request for proposal and received a written answer. The mechanisms in that letter would state how the final lease should be prepared in order to protect that tenant.

Once the broker received the lease which was drawn using the business points negotiated in the request for proposal letter and it response, he would have made informal lease comments and incorporated them with the comments of the tenant. These comments are then given to the tenants real estate attorney for proper legal review and manipulation.

I have NEVER been through that process with a tenant where important lease terms did not need to be changed. It is at this point where the real estate attorney will ensure that the necessary protection is in that lease document prior to signing.

If the landlord will not accept these important changes, then the good tenant broker will have an alternative property to consider before making their final decision.

This process is important given the economic environment today. How bad would it be for the tenants business to get locked out of the property until payments can be brought current?