Being a landlord is difficult enough. When you have a tenant who won’t pay their rent for a commercial lease, what are you supposed to do? Some landlords would do everything they could to terminate the lease, while others would instantly take the tenant to court.
However, what happens if you have an excellent tenant who has been struck by hard times? Would that change the circumstances?
Check Out This Commercial Lease Scenario
A tenant signed a lease for a commercial space back on September 1st. They never moved into the building, but they did pay for two months of rent before ceasing payment. I cannot say this is unusual, because this happens more often than you think.
Since the tenant never moved in, the landlord could easily terminate the lease and simply rent the building to someone new. They could also sue the tenant for nonpayment of the remainder of the lease, especially if they cannot rent the building out in a timely manner.
Of course, as a landlord, you can always sue for the remaining payments of the lease, even if you rent the building out. After all, you had a contract that was signed and you are technically owed that money.
Most landlords would never wait three years to recoup the owed rent on the property, but what do you think would happen if they did? What if they thought the best things possible about the tenant and were trying to give them a chance to pay without going to court?
Would the three-year statute of limitations affect the outcome?
Slania Enterprises, Inc. v. Appledore Medical Group, Inc.
According to the case of Slania Enterprises, Inc. v. Appledore Medical Group, Inc. in May of 2018, it could. In this case, any payments within the lease that were more than three years prior were considered null and void. The reason for this is there was an installment contract rule within the contract itself. Since the payments were always due in installments, any that were due more than three years before could no longer be collected.
This is the same rule that is used for unsecured promissory notes. We can cover that in a future post.
To add another twist to this case, the tenant states they told the landlord they intended to terminate the lease. That notification was given when they simply stopped paying the lease. The tenant believed since they gave notice, they never should have been responsible for the remainder lease payments.
The moral of this story is if you are a commercial landlord, don’t wait too long to sue for unpaid rent. Doing so could prevent you from getting the rent money you are owed, as well as costing you more with the lawyer and court fees for fighting it.
Contact me today if you are dealing with a questionable tenant or haven’t been paid rent. I will work to see what can be done to get you the money you are owed.