Many tenants of commercial are likely to have been adversely affected by the economic downturn and may, as a consequence, be struggling to pay the rent due under the terms of their lease. Landlords should be aware of the following if a tenant fails to pay the rent due under the terms of a commercial lease:
- The tenant may become liable to pay interest (often at a rate higher than bank base rate) on the unpaid rent.
- The tenant may be liable to pay damages to you as the landlord.
- The landlord may be able to re-enter and obtain possession of the property.
- The tenant may be unable to exercise a break clause in the tenancy agreement while there are rent arrears.
- The landlord may be able to take steps towards having an individual tenant declared bankrupt or a corporate tenant wound up.
- If the tenant has persistently delayed paying rent, it may be possible to block their application for a renewal lease.
- The landlord may be able to take action against the current tenant’s guarantor, a former tenant, or even a former tenant’s guarantor to recover the unpaid rent. Notice will have to be served notice in a specially prescribed form in order to seek payment from a former tenant (or its guarantor).
- The tenant may be liable for your costs arising from, or in connection with, the breach of their obligation to pay rent under the terms of the lease.