All Forum Posts by: Kim Hopkins

What's motivating you to be this considerate of the tenant when he's not trying to do you any favors?
You hooked him up with cheap rent. Despite that, he looked out for himself by violating the lease and subletting to further offset his already cheap rent.
Even when he saw you needed to sell, he didn't consider your wants or needs even when you offered to pay him to leave. The compassion is one sided here.
Understandably, you signed an agreement with him and he's not wrong for wanting to stay. He is wrong for subletting though. So since he didn't want to help you out, don't help him out.

It sounds like you're not going to be able to sell. Make him kick out his tenants. He's not even sharing that money with you so they need to go. Maybe you'll get lucky and he won't be able to afford the rent without the other tenants and have to move.

This post says it best! Why any attempt to help this guy out when he has done nothing except take advantage of you?

Its a misplaced sense that LL/Tenants are "friends" I get it, I want to help my industrial tenants too, but you have nice people who don't separate being nice from "fiduciary duty to shareholders"

I hear you. I often see landlords express levels of empathy for tenants that rise above reality and business sense. I'm not suggesting landlords be cold, calculating, insensitive people. Eviction moratoriums are a shining example of how a tenant is not the landlord's friend when their best interests are at stake or there is an opportunity to take advantage.

I'm not avoiding eviction because of empathy for the tenant. I'm avoiding it because he will likely cure the default because he has to have a place to stay more than he has to have the sub tenants. So sending him the default will likely accomplish nothing and burn any Bridges I have to try to negotiate a deal with him to get him out with another method. Make sense now?

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Hi All!

Thank you for all these insightful comments. It's really helpful to see where the consensus is and is not. I'm currently leaning against the eviction route. The reason is because he could simply cure the default by evicting his subtenants and now I have a very pissed tenant who will never work with me on another solution again until October of 2024.

My current approach is to push the buyer to accept an assignment of the lease to them at close. My tenant is actively pursuing a change of use for the building he wants to buy, and it's simply a matter of the uncertainty of timing that is causing all the issues. I'm trying to convince the buyer that the tenant is likely going to succeed in purchasing his building (which is true) and if not is open to reletting elsewhere (also true, with conditions).

The tenant is adamant that he can't sign any agreement that he will leave in X days due to the uncertainty (he would have to shut down his business), and so if my $100k can't give him security, I'm hoping it can give security to the buyer (though I have not offered them a number yet obviously, waiting for their feedback on the assignment idea first).

Will keep y'all posted!

Kim

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Quote from @Jay Hinrichs:

Quote from @Mary Jay:

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Quote from @Dustin P.:

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Quote from @Frederic Babeux:

@Kim Hopkins

What does the current lease say about subletting? That could be your leverage on your current tenant.

Also, you mention a penalty of 35k if tenant doesn't leave, does that mean that they would reduce their purchase price by 35k and accept the building with current tenant until the end of his lease?

The current lease does not allow someone without written approval from us. But I feel like a real jackass for everything to him over that. He's been a good tenant. What do you think?

The penalty means they would terminate the deal and they've made it clear they would not close if he's not out.

It may make you feel like a jackass but this tenant is being a jackass as well, not budging on anything and refusing $100k cash for keys

I would jump on any potential lease violation in a heart beat in this situation

Subletting is a big no-no if the lease if not allowing it.

I would search and see if the neighbors are complaining about him, etc and add that to the eviction...

The problem is, if you are in Oregon or California or New York it may take few months to evict him. By then your buyer may cancel the contract...

Ask the buyer if they would be willing to have this guy as a tenant and you will spend that 100K paying to the buyer withing a couple of next years or at closing, try to search other options besides eviction.

actually in Oregon commercial evictions are a piece of cake she can literally within a few days just go lock the doors.. and not allow anyone in.. we see it all the time with restaurants here in Oregon .. Residential evictions yes big problem commercial no issue to boot out non paying or tenant who has violated the lease terms.

good to know! I guess that makes the situation easier

Yup your correct about SFR tenants rights for sure. but commercial tenants they can be locked out post haste no problem.

Yup, but just remember this is all null and void if he can cure the default by simply evicting the subtenants. His rent is so dirt cheap, it might still be the best option for him over finding another place.

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Quote from @Ronald Rohde:

Someone noted above, why not buy another building a lease it to him at a slight step up. Vacant buildings are cheap.

You either need to terminate his lease, evict him, and close with the art buyer OR move forward.

Do you want to preserve the relationship with the tenant or make money? In this scenario, I don't think you can do both.

Well we definitely don't want to buy another property in portland. We're trying to exit Portland as much as possible.

I would rather sell the building than preserve the relationship with this tenant.

although it will really suck if we evict him and then the art buyer pulls out during due diligence. It will also suck if we give him the default letter and he cures the default by getting rid of the sub tenants and now we have an angry tenant and no sale.

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Spoke with our attorney. He confirms we can send the tenant a default letter for the subletting but that the tenant has a right to cure the default. So in theory he could get rid of all the subletting but then he'd be on the hook for all the rent.

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Quote from @Account Closed:

I don’t think its fair for commenters to be bashing your current tenant. This guy’s lease still has another year on it. I’m guessing that the lease does not have a clause stating that it is binding unless something better comes along. It’s not trivial for a wood shop to shut down and relocate. To me, your offers seem fair and compassionate, but I imagine he feels a bit blindsided and is pretty stressed/upset so he is in defensive mode.

In my opinion, trying to amicably resolve this will take a long time, be a logistical nightmare and any little hiccup along the way could kill the deal.

Evicting a commercial tenant is pretty straight forward—if they break the lease, they’re out. Your tenant broke the lease. The only sticky point I can think of is the fact that you have been fully aware that he has sub letters, but I don’t think that’d be an issue.

I would tell him you are evicting him, but that you would give him cash for keys if he’s out in 30 days.

I think that's a good idea to offer him cash for keys as an alternative to the eviction. I might wait and see though per the comment I'm about to make below

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Quote from @Theresa Harris:

Have you thought about looking for space for him to lease? Moving a business means lose revenue for him. Is this the only tenant in the building? what about asking him if he wants to buy it?

Ok that's super helpful, and the comment above too, I need to put on my big boy pants. Thank you.

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Quote from @Jay Hinrichs:

Quote from @Kim Hopkins:

Quote from @Jay Hinrichs:

Well I am probably not reading this right.. but you offered 100k cash for keys from tenant they refused or counter offered.

you current contract has a 35k penalty if they close and tenant is not gone..

seems simple enough pay the penalty to the buyer and close your deal let them deal with the tenant.

Sorry about that! I did not write the penalty clearly. If we can't get the tenant out, the deal is canceled and the buyer gets the 35k penalty and we don't sell our building.

ouch i would not sign that deal .. if you dont get them out NP but not to the tune of you stroking a 35k check to the buyer.

Yeah we haven't signed the deal. I'm trying to salvage the situation with the tenant before we sign.

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Quote from @Jay Hinrichs:

Well I am probably not reading this right.. but you offered 100k cash for keys from tenant they refused or counter offered.

you current contract has a 35k penalty if they close and tenant is not gone..

seems simple enough pay the penalty to the buyer and close your deal let them deal with the tenant.

Sorry about that! I did not write the penalty clearly. If we can't get the tenant out, the deal is canceled and the buyer gets the 35k penalty and we don't sell our building.

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Quote from @Bob Metry:

@Kim Hopkins I would talk to a great real estate attorney with a landlord/tenant focus asap. Did you have an attorney draft your current agreement? What does it say about defaults, subleasing, etc? Depending on how the lease was drafted, you may have cause for eviction since the tenant has been subleasing without your permission or maybe something else you haven't even thought of. Regardless, I would recommend getting a specialized attorney to guide you.

Yeah we have a great attorney but maybe I should circle back with him again and see if he has any last minute ideas. Per my comment to the guy above, I feel like such a jackass for kicking him out over the subletting since he's been a good tenant. But I can't believe he will not work later even with 100K offer. I think it all comes down to the timing for him. If he can't find a space, he has to close down his business in the interim.

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All Forum Posts by: Kim Hopkins

Kim Hopkins has started 48 posts and replied 254 times.

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant

Post: About to Lose a Killer Deal to Sell Our Building B/C Tenant