I spoke with a friend who had a lease renewal signed with his tenant. It is a property out of state and he just received some interesting news today.

The tenant has notified him that she cannot handle the lease on the building anymore because her business is not making sufficient income to support the rent. The tenant has given notice to break out of the lease by the next month and this is the lease that was just signed last month. If she had known she has financial problems, then why did she even bother signing the lease renewal? The circumstances surrounding these sequence of events was very unusual and appeared rather suspect.

This is a commercial lease for a salon that has a 3 year term on it. All the signatures were on the final draft of the lease renewal. Here is the interesting piece to it. The property manager who is managing the unit indicates that he heard "through the grape vines" that the tenant was looking at another place down the street. However, she probably found it one week too late since she had just signed the lease renewal for 3 more years. Therefore, I would think she is now trying to come up with an excuse to get out of the current lease.

The property manager was notified of the termination of the lease via email. The name of the tenant on the lease is an LLC and not her personal name since she is operating under the business name.

How best should the owner handle this situation? Can they pursue this and get a judgment and go after the tenant personally to recoup the loss damages since she plans on vacating the unit by the end of the next month? How would you resolve this issue or do you know of someone who has gone through this?

State landlord-tenant laws would confirm that the tenants are responsible for the rents and the advertising expenses that accumulate during the period of vacancy caused by the tenant’s untimely departure. In the meantime, do some investigation and find out the real reason why the tenant has suddenly decided to terminate the lease. Let the tenant know that they can break the lease, but they are responsible for the rent until new tenants are found and start paying rent. Furthermore, to prevent losing much time due to the vacancy, as soon as possible, just list the property for lease again.

If you are fortunate and have collected security deposit from the tenant at move-in, you can deduct the expenses incurred by the owner from the security deposit. If it gets to the point, then proceed with filing a small claims case or a lawsuit against the tenant to recover the costs of the lost rents. When entering into any contracts, all parties are aware there are strict rules to adhere to and when either party does not live up to their side of the agreement, then there are consequences.