Commercial Landlord's 3 Options when Tenant Defaults

Commercial Landlord’s 3 Options when Tenant Defaults

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What are the commercial landlord’s options if a tenant defaults under the commercial lease? Legally speaking, there are three known options:

(1) The landlord can treat the lease as terminated and retake possession for its own account. This is probably a less common option because if a landlord exercises this option then it is ending future liability of the tenant.

(2) The landlord can retake possession for the tenant’s account and hold the tenant liable for the difference between the rent the tenant owes under the lease and what the landlord may in good faith recover from re-letting the premises. If the landlord retakes possession under this option, it must give the tenant a credit for rents received from re-letting through the end of the tenant’s lease term. Or,

(3) The landlord may do nothing and if the lease contains an acceleration provision (and many do!), the landlord can hold the tenant liable for all the rent do under the lease (based on the acceleration provision that gives the landlord the option of accelerating the rent). Under this third option, the landlord is not actually terminating the lease, rather it is simply accelerating all of the rent owed under the lease. However, if the landlord exercises this particular option, the landlord cannot collect all of the rent and also re-let the premises, which would fall in the second option. Thus, if the landlord retakes possession, there must be an accounting for furture rents received.

Quintero-Chadid Corp. v. Gersten, 582 So.2d 685, 688-89 (Fla. 3d DCA 1991).

If you have questions relating to a commercial landlord or commercial tenant’s options when there is a default of the commercial lease, do yourself a favor and invest in the right legal representation to help you navigate through the issues.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.