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In April this year, one of our tenants vacated their tenancy and just stopped paying rent. Before that, they did come to me and expressed the wish to sublease, I explained that was fine but they needed to continue paying rent and upholding their commitment to the lease. I said it was their responsibilty to secure a tenant, that we also had commitments (mortgage) that rely on this rent. The background is .. they had a mexican food franchise in a large NZ southern city which they sold, although the new buyer did not want to purchase the shop located in our building (they had about 4 shops in total) . So they sold the business and still had this shop running - they decided simply to walk away from paying rent. In the meantime, the father of the tenants has opened a new food restuarant in his name and they have now opened two stores in our city - seemingly doing quite well.
They have a tactic of signing long first term leases and then using a 'hobbled' one year personal guarantee as an out.
Their lease with my company is still very much live and I have been working hard to advertise, contact agents etc to secure a new tenant. Our current commercial market has also changed in the past year, so its harder to find a tenant and the psm rate has decreased.
My lawyer has recently just sent a Stat Demand for the outstanding rents & opex which has ruffled a few feathers.
Once we secure a new tenant (likely) at grossly reduced rate, we will call on the personal guarantee and look to sue the company for the loss. Very likely though we will take a bigger hit to make good the premises and incentive for new tenant.
Has anyone had a similar experience in a tenant that has walked away from paying rent where they have issued a demand that was ignored and taken further steps to recover debt ?? Or dealt with tenants that remove all assets from the company to avoid paying rent . Has anyone had to take the decision to accept the loss, end the lease and move on ? Is it worth sticking to our guns ?
We have tenants in our building with very high values who would likely work cleaning jobs over night to pay rent. I am inclined to not give up lightly as it is very unfair - these people (under the father) are still operating a similar business and think its ok to make commitments, sign leases and then to simply walk away.
Would be great to understand similar experiences with others.
In April this year, one of our tenants vacated their tenancy and just stopped paying rent. Before that, they did come to me and expressed the wish to sublease, I explained that was fine but they needed to continue paying rent and upholding their commitment to the lease. I said it was their responsibilty to secure a tenant, that we also had commitments (mortgage) that rely on this rent. The background is .. they had a mexican food franchise in a large NZ southern city which they sold, although the new buyer did not want to purchase the shop located in our building (they had about 4 shops in total) . So they sold the business and still had this shop running - they decided simply to walk away from paying rent. In the meantime, the father of the tenants has opened a new food restuarant in his name and they have now opened two stores in our city - seemingly doing quite well.
They have a tactic of signing long first term leases and then using a 'hobbled' one year personal guarantee as an out.
Their lease with my company is still very much live and I have been working hard to advertise, contact agents etc to secure a new tenant. Our current commercial market has also changed in the past year, so its harder to find a tenant and the psm rate has decreased.
My lawyer has recently just sent a Stat Demand for the outstanding rents & opex which has ruffled a few feathers.
Once we secure a new tenant (likely) at grossly reduced rate, we will call on the personal guarantee and look to sue the company for the loss. Very likely though we will take a bigger hit to make good the premises and incentive for new tenant.
Has anyone had a similar experience in a tenant that has walked away from paying rent where they have issued a demand that was ignored and taken further steps to recover debt ?? Or dealt with tenants that remove all assets from the company to avoid paying rent . Has anyone had to take the decision to accept the loss, end the lease and move on ? Is it worth sticking to our guns ?
We have tenants in our building with very high values who would likely work cleaning jobs over night to pay rent. I am inclined to not give up lightly as it is very unfair - these people (under the father) are still operating a similar business and think its ok to make commitments, sign leases and then to simply walk away.
Would be great to understand similar experiences with others.
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