If you are a commercial landlord in Texas, there is always the risk of commercial tenants defaulting on their lease. That is why it is essential that you understand how you can handle a commercial lease default in Texas and what your legal rights are as a landlord. And in most cases, your lease agreement should outline what your next steps can be.
If you have a commercial tenant who has defaulted on their lease in Texas, you need to get the help of a Texas business lease dispute attorney. An attorney can help you understand what your next steps should be through either dispute management or litigation.
Keep reading to learn more about the best landlord remedies for a commercial lease breach in Texas.
What Constitutes a Commercial Lease Default?
In many situations, when a commercial tenant defaults on their lease, it may be that they simply stop paying their rent. However, failure to pay rent isn’t the only type of commercial lease default that Texas landlords may run into. Here are some other examples of what Texas will consider a lease default:
- Violation of lease terms
- Failure to maintain the required insurance
- Failure to maintain lease obligations
- Abandonment of the property
If you are experiencing any of these issues with your tenants or don’t know if the situation qualifies as a lease default, you should consider consulting with a business lease dispute attorney in Texas.
Steps Landlords Can Take After a Default
In situations where it is a legitimate commercial lease default, there are several steps you can take to remedy the situation:
- Review the lease agreement: It should include a notice clause to be sent upon default. The lease should tell you how you need to provide the notice, where it will be sent, and who needs to be notified.
- Provide notice of default: Texas law usually requires landlords to provide tenants with a notice of default. You may need to provide different types of notices, including a notice of monetary default, a notice of non-monetary default, a notice of failure to maintain insurance, or a notice of lockout or termination. Texas law also requires you to follow the lease terms that include specifics regarding default situations.
- Cure periods: After providing a notice of default, commercial tenants are given a cure period that allows them to fix the reason for the lease default. How long they have to do this will depend on the type of default, but the standard timeline can range anywhere between 10 and 30 days.
- Termination and eviction: If the lease breach is not corrected within the cure period, you may be able to proceed with a lockout, which includes changing the locks on the property. Keep in mind that you will need to follow Texas law when doing this. You can also proceed with lease termination and eviction proceedings, which often require a notice of lease termination and a notice to vacate.
- Seeking damages: Depending on the nature of the lease default, you may be able to seek damages after going through with termination and eviction. You can do this by suing the tenant for things like unpaid past due rent, attorney’s fees, or the cost associated with repairing the property. In some cases all rent due for the entirety of the lease may be recoverable.
How Commercial Landlords Can Prepare For Potential Defaults
It’s always best to be proactive instead of reactive when it comes to your tenant defaulting under its lease. There are several ways that you can get ahead of this problem so that you are better prepared and know what legal steps to take.
The main step you need to take is to make sure your lease agreement provides clarity regarding how defaults will be handled. They should also include reasonable cure periods which allow the tenant enough time to try to remedy the default.
It can also be helpful to have personal or commercial guaranties on your lease. Just keep in mind that any guarantors will also need to receive a notice of default.
Common Legal Issues in Commercial Lease Disputes
Dealing with a commercial tenant lease default can be an overwhelming process, as there are many steps you may need to take. The specific steps usually depend on the lease agreement and notice clause, as well as Texas law.
It’s important that you do not act hastily if you have a commercial tenant who hasn’t maintained their lease obligations. Acting too quickly without taking the correct legal steps can result in a variety of issues, some of which include:
- Failing to comply with Texas law as a commercial landlord.
- Not providing notice quickly enough, which can result in much past due rent adding up.
- Not following the grace period outlined in the lease, which allows the tenant to cure the default.
FAQs
What happens if a commercial tenant stops paying rent in Texas?
The landlord should provide a written notice of default. From there, the tenant will need to cure the default by paying the rent or risk having the lease agreement terminated, which can lead to eviction or acceleration of rent from the remainder of the term of the lease.
Can a landlord immediately terminate a commercial lease?
Not usually. In most cases, the landlord must provide a notice of default.
Can lease disputes be resolved without going to court?
Yes. Lease disputes can often be resolved during the cure period after the tenant has received the notice of default. This usually includes paying all of the unpaid rent and maintaining all lease agreement requirements moving forward.
Get the Help of a Texas Commercial Landlord Attorney Today
Although you have certain legal rights as a commercial landlord in Texas, especially if a tenant defaults on their lease, this can be a complex issue to navigate. That is why it is recommended that you work with a commercial real estate lawyer in Texas who can help you decide on the best course of action. Contact us today at Sewell Sewell Beard LLC by calling us directly at 972-777-5390 to discuss your situation with one of our commercial landlord attorneys.