Tenant Wants To Break Lease
I have a tenant in an small office building that wants to break their lease and leave 2 years into a 4 year lease. They have been HORRIBLE tenants, complaints, late rent every month, hired criminals to work there etc. etc.... While everyone in the neighborhood will be glad they are leaving, I will be stuck with an empty unit and not sure how to fill it. I bought this 2 unit office with tenants in place and have never looked for a business tenant, not to mention the state of renting office space in the economy. They have said they would be willing to make some offer to break the lease, hinting at maybe just a couple months rent but nothing formal yet. They also hinted at filing bankruptcy if they cant get the business in order. What should I be looking for here? They are going to leave anyway, should I be happy with a couple months rent or should I be asking for more? If I ask for too much and they file bankruptcy will I get nothing? Their unit needs some much needed updating which I was hoping to save enough money in the next 2 years to do, but I dont really have it now.
Will you be hiring a commercial RE agent to assist with filling the space? If so, I would talk to them and ask them for information on how they would market the space, how long it will take to get a new paying tenant, etc. Once you have this info. it should assist with negotiating.
Please watch about saying things (in writting no less) like "hired criminals", that screams SUE!
Has he made an offer?
What is the market like (as a PROFESSION COMMERCIAL broker)
good luck.
I was hinted at an offer of a few months rent. The commercial market here is just like everywhere else. For rent signs everywhere.
offer to reduce the rent to your minimum tolerance level. Since the place needs repairs and you dont have the funds, you cant cancel the lease.
I understand their business is failing but not yours... yet. A long vacacy may put you out of business also. you need this time to save money to properly repair the building.
To make a long story short, you need 6 months rent to cancel, but it doesnt look like they can afford it. But you cant afford to cancel the contract for less than that either.
Good luck
They are leaving no matter what. They claim they dont even come close to making money at this location. Plus I dont want them at a reduced rent. They are too much trouble. I would rather have a new tenant at a reduced rent.