Many months after the initial covid shutdowns, courts continue to hear disputes over unpaid rents between commercial landlords and tenants. With stay-at-home orders and so many restrictions on non-essential business activity, many tenants across the country have struggled to meet their lease obligations.
When working in the real estate advisory and commercial property investment industry, due diligence is critical to successful purchase. This is especially true when it comes to assessing the value and quality of an existing commercial tenant base and the future income stream of the property.
Go one step further. Look beyond the past performance of the existing tenants as it is not always a reliable indicator of future performance.
Covid-19 is having a devasting impact on the global economy. It raises significant implications for commercial landlords and their tenants facing the crisis. The landlord is placed in a precarious situation during these times and is encouraged to improve their lease negotiations to protect their rights. There are several measures to help with protection, including comprehensive credit reporting, ensuring a guarantee or indemnity and requesting letters of credit and larger security deposits. These measures can assist should a tenant become delinquent or bankrupt.
The success of your franchise depends on a number of factors, one of the most important being the people that represent your brand. Recruiting the best franchisee for your operation is critical to the success and reputation of your organization.
What could have changed since the original lease was executed?
You need the best information possible prior to launching a legal action against a debtor or attempting to enforce a judgment. The defendant’s financial worth will significantly impact the likelihood of recovery.
Obtain the accurate picture of the defendant’s circumstances so that you will know if the legal costs incurred are going to be justified by successful collection. Guesswork is risky for the outcome and unnecessary. Take the extra step by using Quality Credit’s Asset Accumulation Report and make an informed decision regarding next actions.
Due to uncertainty relating to the duration and severity of the COVID-19 pandemic, it is not
possible to estimate the future impact of the pandemic. During these unprecedented times, comes
the issue of your current or future tenants’ short term or long-term ability to meet rent obligations, leading
to important decisions you will now have to make. All property investments are subject to a degree
of risk and uncertainty. The tenant qualification strategy you use to replace vacated tenants,
deal with lease roll-overs and pre-leasing development space can significantly reduce tenant
risk.
Do you have all the information you need for negotiations with your potential tenant?
The financial implications of having a tenant default on a lease can be severe and often a simple database “snap-shot” only reveals a part of the prospective tenant’s financial story.
During these uncertain times, when it's becoming increasingly important to do a thorough background check on tenants, our team at Quality Credit Reporting provides the tools you need to protect your business and make informed decisions about prospective tenants.
Selecting the right candidates to represent your brand is critical to your operation’s ongoing success. These franchisees will be the face of your company and you need to trust that they will maintain your brand image.
SKIPPED AND DELINQUENT TENANTS
During these un-precedented times with COVID-19, the numbers of Skipped and Delinquent Tenants is on the rise. Being a property manager brings with it the potential for serious risk, liability and consequences at a time when the scales of justice seem tipped in favour of delinquent tenants. Once a tenant has gone delinquent, property managers must decide whether to proceed with legal action, and after all, if there is minimal probability of recovering the debt, why incur the costs of legal action?
