My commercial tenant hasn’t paid rent. What are my options?

On Behalf of | Apr 18, 2024 | Commercial Real Estate, Leasing

Overdue rent from large tenants can have a domino effect, especially when these payments are crucial to your cash flow. In Texas, there are a few ways you can recover unpaid rent. However, your business relationship with the renter may influence your approach.

Speaking to the tenant

Start by talking to your tenant directly. Hear out their reasons for late payment, but also stand your ground with respectful and clear communication. Sometimes, an honest and direct conversation can lead to a mutually acceptable solution, eliminating the need for further action.

Prepare for this conversation by having records of paid and missed rent ready. Take detailed notes of everything that comes up, including dates and a summary of what was said. This documentation can help show your attempts at a peaceful resolution, which may be advantageous in court.

Taking initial steps to address unpaid rent

If talking does not resolve the issue, it may be time to double down on your efforts in collecting rent. Review your lease agreement for any specific provisions related to handling late payments. It could guide your next steps, including serving a legal notice.

Serving a legal notice

This document formalizes your intent to pursue legal action. It must meet the requirements of the Texas Property Code for it to hold up in court during eviction procedures.

Most tenants pay or negotiate a payment plan after receiving notice. However, eviction may be necessary if your tenant still fails to settle their debts.

Exploring alternative solutions before taking legal action

You may not want to proceed with eviction immediately, especially for long-standing tenants. Alternatives such as a payment plan or mediation are less confrontational solutions that may better meet your needs. These options may help protect your business relationship while resulting in an outcome that works for both sides.

Initiating eviction proceedings

Despite your efforts to resolve matters amicably, some tenants are impossible to work with. Eviction may be the only way. Every step of the process, from filing to serving the notice, must meet the strict legal standards of Texas. Failing to do so may result in legal complications.

For complex situations, especially those involving large tenants, consider seeking the advice of an experienced real estate attorney. They can guide you through recovery methods, help minimize risks and delays and represent you in court if the need arises.

Regardless of how you decide to tackle your issues with your tenant, acting legally and ethically is critical to protect your business.