Tenant wants out and has someone that wants in (hopefully simple)
I have a commercial space and the current tenant has a year left on her lease. I've noticed business slowing down and suspected they might shut down (they have multiple locations). She is talking about shutting down this location and asked what will happen. I told her she would be responsible for the rent until a new tenant moves in (that's correct, right?).
There is someone (her manager) that wants to open up a similar type of business and has approached me about taking over the space.
The new tenant is concerned that if she does, the old tenant may get mad and try to come back and start trouble (being her lease isn't up or something).
How should I go about "terminating" her lease but ONLY after a new tenant moves in? What is the proper protocol for doing something like that?
Thanks in advance,
Kevin
I think this is not as simple as it may seem. I would check with an attorney to ensure that you can legally execute on the deal like you have described. I would draw up an addendum to the original lease with current tenant stating the specifics of how you and her can agree for her to vacate the property. Once she has agreed to vacate the property and you and her have a mutually agreed upon date and conditions, I then would approach the prospective new tenant and future date the lease with them contingent upon current tenant vacating in accordance with the addendum.
It's too bad this isn't even more simple, where the manager asks to just buy the business from her boss as long as you agree she can take over the remaining lease term, then run her credit/background to make sure she's a decent risk before agreeing to do so. I'd ask if that was a possibility. If the original tenant wants out, she may appreciate the opportunity to exit so easily, even if the amount she sells for is small.
Originally posted by @Lynn McGeein:
It's too bad this isn't even more simple, where the manager asks to just buy the business from her boss as long as you agree she can take over the remaining lease term, then run her credit/background to make sure she's a decent risk before agreeing to do so. I'd ask if that was a possibility. If the original tenant wants out, she may appreciate the opportunity to exit so easily, even if the amount she sells for is small.
The problem would be that they are keeping the name. They have another location or two open with the same name as well as some franchised locations in other cities.
She wants out of her way of doing things so a franchise option wouldn't happen either.
@Kevin Richard you shouldn't care about the problematic business relationship. That's the manager's/potential tenant's concern. Old tenant wants out. Negotiate an end date. New tenant wants in. Negotiate a move in date. I would remind exiting tenant that you will not apply a penalty fee for breaking her lease. You just want to maintain your cashflow. As long as there is no vacancy at any point (which there shouldn't be as exiting tenant should be responsible until your replacement is paying), you should be fine.
Your responsibility as a landlord is to provide a product at market value, to maintain it as need be, pay any bills as explained via your lease and communicate with the tenant. Getting caught up in tenant drama is not your responsibility. Don't make more work for yourself.
Originally posted by @Kristina Heimstaedt:
@Kevin Richard you shouldn't care about the problematic business relationship. That's the manager's/potential tenant's concern. Old tenant wants out. Negotiate an end date. New tenant wants in. Negotiate a move in date. I would remind exiting tenant that you will not apply a penalty fee for breaking her lease. You just want to maintain your cashflow. As long as there is no vacancy at any point (which there shouldn't be as exiting tenant should be responsible until your replacement is paying), you should be fine.
Your responsibility as a landlord is to provide a product at market value, to maintain it as need be, pay any bills as explained via your lease and communicate with the tenant. Getting caught up in tenant drama is not your responsibility. Don't make more work for yourself.
Absolutely agree, I was just looking for the proper wording to do just that.
"Negotiate move out date" sounds like I'm letting them out of their lease. I'm just looking to make sure it's clear that they will be responsible for lease until new tenant arrives. Then make sure that the lease is terminated properly at that point.
@Kevin Richard I do this all the time. In writing, tell the tenant that she is responsible for her lease until your agreed upon end date. Let her know that you understand her concerns and want to do what you can to work with her. I'd let her know that you have an interested party that you are actively vetting and will work to negotiate a move in date for the new tenant as soon as possible given that you and the current tenant have had such a great working relationship. Beyond that, I would keep her in the loop in terms of how far along you are in the process of getting new tenant signed and relieving existing tenants of the burden of the lease. Works for me every time and I've done it at least a dozen times. I always remind the tenant of their responsibility, but let them know that I will do my best to help. Seems to work for me.
Awesome!
Thanks for all the advice.
Great news though, apparently, the new tenant has talked with the old tenant and is even going to buy out inventory. So we SHOULDN'T have any problems.
Should be able to do an open lease take over or something to that effect.
Now, to find the paperwork on setting that up!