Commercial Property Managers – Check Out All Your Leases and Default Provisions in New Managements

When a commercial property manager takes on a new lease and property to manage, I usually tell them to spend a good deal of time reading the leases before they form an opinion about the property and the tenant mix.

The fact of the matter is that any and all leases in the one property will be different from each other.  Critical dates, definitions, and terms and conditions will all have an impact on the way things are done.  If there is to be a lease default by the tenant, the first place to go for information is the lease.

Here are some of the main factors to look for when it comes to handling a dispute and default with a tenant.

• The definition of lease default will be in the lease and it will go on to say exactly when and how you (as the landlord’s property manager) can take action to remedy the breach or default.
• As to when you can take action will be important, as it will have bearing on legal relationships between the parties.
• Look out for the relative legislation or laws that can also impact the lease, the tenant, or the landlord.  Sometimes laws will interact with the lease documentation and the default event.
• Who can take action and how will vary depending on the lease.  Read it to know what can occur.
• Time for the default notices to be served will be set out in the lease clauses.  There may also be factors of ‘time is of the essence’ when it comes to notices between the parties.  When in doubt get a good solicitor to advise you based on the existing lease between the parties.
• In most cases the tenant should be given a reasonable chance to remedy the breach.  Legal precedents may have an impact on what time frame is acceptable for the remedy to occur.

So all of these are very good reasons to read the lease comprehensively when you first take on a new commercial property or property management client.

When something goes wrong in a property, the first place to go is the lease.  Read what it has to say; invariably the answer needed will likely be in the lease.

You can get more tips for commercial real estate managers and agents in our Newsletter right here.