As the pandemic, supply issues, labour shortages and a volatile economy continue to challenge commercial concerns across North America, business failures remain distressingly common. Unexpected closures cause a host of serious difficulties for commercial landlords including property abandonment, damage, abandoned possessions, and sometimes, distressing finds.
“Property abandonment by restaurant businesses – very common during the pandemic – can be especially challenging,” says Joel Moss, President of Paul Davis of Santa Clarita, California, explaining that abandonment means the tenant departs before the lease ends without notifying the landlord. “Restaurants may close unexpectedly when the electricity is cut off for non-payment. Perishable food, sometimes left mid-preparation in the kitchen, spoils at room temperature, attracts vermin, rots, moulds and creates an odourous mess. Even worse, unfortunately, abandoned pet stores aren’t unheard of and they often leave hazardous biological contamination.”
Paul Davis, versed in handling restoration and mitigation after property abandonment, advises a six-step process should your tenant vacate a lease before the term ends:
- Consult your property attorney: Commercial lease terms vary so a property attorney is best positioned to outline landlord and tenant penalties, options and responsibilities. Some leases, for example, require that landlords make good faith efforts to find a replacement tenant or otherwise get economic value from the property.
- Secure the property and tidy its appearance: Change the locks, update the security system, ensure outdoor lighting is functional, care for the landscaping and secure the premises. Vacant commercial properties become magnets for vandalism, mischief, arson, injury and unauthorized entry.
- Document the damage and get repair estimates: Inspect the property and document the condition and appearance. Take time-stamped photos and videos to document any issues. Ask reputable disaster recovery and restoration firms to assess conditions and provide written repair estimates.
- Serve notice to the tenant: Notify the tenant in writing – sent by certified carrier to the last known address – that the lease has been abandoned. Your property attorney will advise on additional legal requirements when communicating with the errant tenant.
- Evaluate possible financial remedies: The property attorney can advise if legal action is recommended and how a security deposit may be used. Unfortunately, tenants who abandon leases are often financially insolvent and difficult to locate, complicating financial relief.
- Begin mitigation/restoration of premises/seek new tenants: Unless legal stipulations require delays or other actions, retain a firm like Paul Davis to restore the property to previous conditions. The sooner the property can be rented, the lower the financial impacts on landlords and owners.
“No landlord likes discovering that a tenant has disappeared or is leaving a lease unexpectedly,” says Moss, “but we recommend compassion and continuing cordial communications with the tenant if at all possible. It’s been a tough time for all businesses, so respect, empathy and dignity make a bad situation a bit more bearable for everyone.