What happens to your finances when a tenant goes into administration, leaving you with an empty commercial property and unpaid rent? Or what if your tenants simply avoid paying the rent or service fees they owe?
Years can go by without you seeing a single penny, and eventually any hope of recovering the money slips away – leaving you sighing to yourself and accepting that you’ll just have to take the hit to your finances.
But what if we said that didn’t have to be the case?
Old commercial debt can act like a weight around a landlord’s neck, putting pressure on their finances even years after the fact, and can damage belief that investing in commercial property is a good idea. Unfortunately, many commercial landlords are unaware of certain rules and information which can keep them safe and help to recover their debt. For example, did you know that commercial rent will follow a tenant around for 12 years (from the date that the payment fell due), offering landlords the opportunity to reclaim their money even after more than a decade has passed?
This was the case for one of Carlton Park’s clients. Two years earlier, their tenant went into administration under the management of a different agent. To make matters worse, said property management agent failed to chase the tenant or their guarantors for the outstanding amounts, leaving the landlord heavily out of pocket.
After approaching Carlton Park with the issue, the client was relieved to find out that there was still a chance of recovering at least part of the outstanding amount. Our expert team investigated the tenants, their assets, and the contract, dedicating hours to learning as much as possible about the situation.
Through our process, we were able to recover a significant amount of the £50,000 debt, much to the relief of our client. And our no win, no fee policy meant that the landlord wasn’t faced with massive expenses for our services, as would be expected from a debt collection agency.
Although recovering old commercial debt is a welcome tactic, prevention is still better than cure and properly protecting landlords from this happening is of the utmost importance. For example, an all too common reaction to tenants not paying the rent and other sums is to change the locks on the property. In actual fact, this forfeits the lease and the Landlords will be liable for Non-domestic rates from the date when the locks are changes. The worst being the Landlords losing his rights in charging rent from the tenants from the date the locks are changed and the lease has been forfeited.
The best approach in this instance is to inform tenants that locks have been changed for safety, security or insurance purposes. By doing so and informing tenants of the reason, they remain liable to pay rent and service fees owed. Even earlier than this, a commercial property management company should be ensuring that rent is collected on time in a consistent manner, whilst the relationship is nurtured to prepare for such negotiations if the worst does happen.
Of course, old commercial debt still happens, but as a commercial landlord, you shouldn’t have to accept the situation. Instead, get in touch with Carlton Park management and let us lighten the load of commercial debt before it weighs you down for good.