Tenant Deferring Maintenance

[Manley Peterson]

I am looking at a commercial property for sale with one tenant (Chinese restaurant) on a NNN lease. However, even though the lease says the tenant must do maintenance on the building, there are several deferred maintenance items (broken toilet, bad window seals, light fixtures). The business is apparently doing well, though. The lease has about 1 year left and tenant has expressed interest in renewing for another 5 years.

So, what is the best way to enforce the lease and make the tenant fix the problems?

[Bill Gulley]

Obviously a poorly written lease. For a restaurant the lease should be specific as to drains kept clear, operable toilets, cleaned grease traps, health code issues pertaining to the RE, etc. Inspections need to be addressed. The owner can make a demand for repairs, if not made, the landlord can terminate the lease taking it to a default rent per day past a date for possession or, fix the item and make that part of the rents next due and if unpaid the tenant is in default of paying the rents due. Which brings you to terminating the lease again.

Such issues are common for small commercial leases, it's up to the owner to stay on the tenant to keep things up. Poor management, newish owners or those that don't care may feel like they don't want a vacancy, most restaurant operators won't leave an established location if business is good, so hold their feet to the fire. :)