Because the Dallas commercial real estate industry is still in a precarious situation, landlords may often wonder about releasing a tenant from their lease. After all, the question of whether they can fill that commercial space with another tenant is certainly in question, given the harsh state of the Dallas commercial real estate market.
Consider Local Laws Regarding the Termination of a Lease
One of the first issues you will need to consider when deciding whether to release your tenant from their lease involves your state’s laws; in other words, commercial and residential tenant situations are far different, in the eyes of the law. You must also consider whether you will be able rent the vacant space in a reasonable amount of time, and whether the tenant is willing to offer up a concession in return for cancelling their lease.
Should you Release your Tenant from their Lease?
It is important to realize that, unless your tenant is willing to offer up a really valuable concession, or if you have another tenant ready and willing to take the current tenant’s place, then it probably isn’t in your best interest to release a tenant from their lease.
In fact, if the tenant moves without finishing up the current lease, you will likely be able to recoup your rent costs through litigation. Often times, you can avoid litigation if the tenant is willing to offer you a buyout on the lease. There are also situations where you can retrieve the difference in rent if your tenant leaves before the end of their lease and you are forced to rent out the commercial space at a lower rate.
All of these options typically require the help of a qualified commercial real estate attorney, so don’t head into this territory without one, or it could cost you big.
Consider your Ability to Re-Rent the Property
The bottom line is that you must ask yourself the most important question: How long will it take me to rent out the commercial property? If you are able to secure a new tenant in a short amount of time then it is probably not worth the time or the effort to collect the unpaid rent from the tenant. However, in slow markets like this one, you may be unable to rent out the space for a long period of time; this is most definitely a case where litigation is necessary to recoup some of your losses.
In the end, however, it is important to pay close attention to your local laws regarding terminating leases, as many times your tenant may be able to do so legally, such as a transfer or loss of a business.