Act Promptly After Tenant Misses Rent Payment
It’s critical to take action—by enforcing the lease for a tenant experiencing financial difficulty—as soon as that tenant sends a partial rent payment or misses a rent payment altogether. Regardless of how important the tenant is to your building or center, worry about yourself first. Quickly deal with the issue to prevent the tenant from inadvertently modifying the terms of the lease.
For example, if you allow the tenant to pay late every month or accept partial rent payments, it could argue that the lease has been modified by an oral agreement. Prevent this by immediately meeting with the tenant to affirm the terms of its lease as soon as it makes a late or partial payment. Make sure to tell the tenant that rent will continue to be due on the day of the month specified in the lease, but that you’re accepting the late or partial rent payment as a one-time consideration.
It’s very important to affirm the lease so that it doesn’t become modified, particularly if the tenant thinks that it can pay one week’s rent at a time throughout the course of the month. It will help avoid turning this into a week-to-week tenancy.
For model language you can adapt when affirming a tenant’s lease, as well other actions to take when a tenant appears to be struggling financially, see “Protect Interests When Dealing with Financially Troubled Tenant,” available to Insider subscribers here.