Your Commercial Tenant Stiffs You on the Rent. Now What?
- posted: Dec. 01, 2015
What happens when your previously reliable commercial tenant stiffs you on the rent? If you are a commercial landlord in Kentucky, you’ve likely had to grapple with this question. If you are a commercial landlord who has not yet faced this issue, give it time; you’re up next. All landlords have a fundamental interest in securing a responsible tenant to occupy their property, the security of their property, and collecting rent for the use of their property. In the event of a breach of a commercial lease, the last thing the commercial landlord wants to do is misstep in securing its rights. Any misstep may result in landlord being left out in the cold on months of rent, and damage to its property. These risks will rear their ugly heads if the commercial eviction is not handled properly.
In Kentucky, the commercial eviction procedure is known as a “forcible detainer” proceeding. The purpose of a forcible detainer proceeding is to simply determine who has the right to possession of the commercial property at issue. Forcible detainer proceedings arise if the commercial tenant hasn’t paid rent, or if it has otherwise failed to comply with other terms of the commercial lease. In order to recover the money owed by the tenant for back rent, late fees, damages, etc., a landlord is required to file a separate civil action against the tenant. In either case, the commercial landlord must act swiftly – and act correctly – to secure its rights.
Commercial landlords are required to provide proper written notice and an opportunity for the tenant to cure its breach of the commercial lease. If the commercial tenant fails to cure its breach within seven days of proper notice, the landlord must proceed formally by filing a forcible detainer complaint to evict the tenant. After the complaint is filed, the court will schedule a hearing. In Kentucky, a representative of the landlord must appear at the hearing to offer testimony as to the landlord’s right to possession of the property. If the judge grants a forcible detainer judgment, the tenant has seven days to either vacate the property or appeal. At this point, the commercial tenant can either make plans to vacate the property, appeal, or try to make a deal with you.
Resolution at this point may sound great. It is important, however, that in your eagerness to put the matter behind you, you do not give up your rights to continue collecting rent and enforcing the commercial lease. If the tenant appeals the forcible detainer judgment ordering it to vacate, the court will require it to post a bond in the form of ongoing rent payments. The court clerk will hold these funds until the appeal is resolved.
If the tenant does not file an appeal but also does not willingly vacate the property by the end of the seventh day, the landlord must obtain a writ of possession from the district court judge and ask the County Sheriff to enforce the judgment. The Sheriff will require a fee for this service, and precise instructions as to the removal of the tenant, either by “put out” or “set out.” The Sheriff is then authorized to physically remove the tenant and reclaim the property for the landlord. You may be tempted to avoid the hassle and expense of enlisting the Sheriff’s services and resort to “self help” in evicting the deadbeat tenant. It is important to understand the risks to the self-help approach. Regardless, once you have successfully removed the commercial tenant, you will need to secure as much of the back rent as possible through the enforcement of a “landlord’s lien” on the personal property of the tenant. It is critical that you differentiate between the value of your lien and the overall value of the tenant’s property. While you are entitled to receive value for rent of your property, you are not entitled to convert the tenant’s property in excess of the value of your lien, lest you face a lawsuit for damages and attorneys’ fees from the tenant.
If you need assistance with these issues, please do not hesitate to contact Justin Whittaker at 859.344.1188. Justin is also happy to help you prepare a commercial lease agreement. You can email Justin at [email protected].
Hemmer DeFrank Wessels, PLLC serves clients throughout Kentucky, Ohio and New York, including the cities of Cincinnati, Covington, Florence, Ft. Wright, Newport, Erlanger, Independence, Highland Heights, Park Hills; and the communities of Greater Cincinnati, Northern Kentucky, Kenton County, Boone County, Campbell County, Grant County, Hamilton County, Clermont County, Warren County and Butler County.