Commercial Real Estate Investment/Commercial Eviction / Lock Out

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Expert: - 8/5/2008


Question
Hi
I am a partner in a corporation that operates 2 day care centers.  In April of 2007, my partner, as an officer of the Corporation, signed a lease on a facility.  We operated through December of 2007 and because of the high rent and low enrollment, had trouble making the monthly rent payment.  We went to the Landlord, explained our situation and they were very nice and reduced the rent for a period of 6 months.  Further, we were told if we still had problems at that time, come back to them and they would work with us.

In late June, we notified them our enrollment had dropped and we still could not afford the rent.  We were told they would work with us to close down the center and they asked us not to file for Bankruptcy because it would tie up the building for a long period of time.

On friday afternoon, August 1, after the center closed, the owner went over, posted a note on the door that read they were taking possession of the building for non payment of rent and they changed the locks.  When we called them today, they told us we owed them over $50,000 and they were taking us to court.  They would not allow us entry to retrieve employee or student records; all of which are confidential.  Further, all furniture and fixtures, most of which is financed, has been locked up by them.

All communication with them has been face to face or over the phone.  They have never given us written notice of any kind and have always told us "they understood" and wanted to work with us.  One of the last conversations was that they just wanted to work with us so we could get out of the building so they could find another tenant.  Again, the only time any legal action was mentioned was when they asked us not to take Bankruptcy.

Do we have any recourse.  We are in Viriginia.

Thank you
Ken Rogers

Answer
Ken-

I am very sorry for the problems you are having to resolve.

This is clearly a matter to refer to an attorney that specializes in Landlord/Tenant Law.

I would make certain suggestions about how you might have approached this matter differently next time, but that is of no importance to your current situation.

If you cannot afford an attorney, you and your partner can contact your local bar association to determine if they have any members that provide "Pro Bono" legal services, or legal assistance at a greatly reduced fee. Many do.   

Best of luck.  I know a restaurant operator whose first business failed and went into bankruptcy, and who know owns nine (9) different extremely profitable restaurants and sells his food concepts as a consultant.

-Jim

Commercial Real Estate Investment

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Jim Avancena, CPM

Expertise

Best qualified to answer questions that involve commercial leases, that is, basic issues as well as the often unexpected effects of the complexities and inter-relationships of the provisions a lease may contain, explain how seemingly innocuous text in your lease can have a major impact on a Tenant or Landlord and their business operations, and the common practices utilized in the industry. I can untangle most matters that may come up from the time a tenant begins searching for a office or store space and the lease acquisition process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of problems that may come up during the lease term and even after a tenant moves out. I have practical experience with most property management issues and resolving landlord and tenant disputes - especially those involving what may appear to be overcharges assessed for additional lease charges like CAM costs, operating expense reimbursement, real estate taxes, utilities, construction improvements etc. Note that I am not an attorney and cannot provide legal advice.

Experience

Thirty years active experience in the commercial real estate industry as a licensed real estate broker in the Washington DC Metro area (DC, Northern Virginia & Maryland). I have been admitted (approved) by the Maryland and DC courts to testify as an expert witness on the subjects of Commercial Leasing and Property Management in the area of standard industry practices. I have had a business for the last 14 years advising virtually every form of business entity from large national corporations to the smallest ma & pa new businesses regarding a wide range of commercial real estate matters in addition to property management and commercial leasing.

Organizations
Currently my three children keep me so busy that it is difficult to participate in organizations with continuing and specific time requirements.

Publications
I publish a local commercial real estate newsletter titled: "Tenants First". My firm was the subject of a high profile Washington Post business section cover page (2.25 full pages) feature story on January 13, 1993; titled "Overcharging Overhead".

Education/Credentials
BA in Political Science from Memphis University, and five years of study in the real estate development summer program at MIT. I was certified as a commercial property manager (CPM-IREM), and currently hold a brokers license in Maryland and the District of Columbia.

Awards and Honors
The same plaques and honors that most others in my industry have earned. I have none that I consider especially meaningful.

Past/Present Clients
Past clients include: The World Bank, George Washington University, National Association of Criminal Defense Attorneys, US Department of Commerce, The American Benefits Council, K-Mart Development, many law firms, a national union, other major organizations, and many, many small business firms and retail operators that I am most honored to serve. I estimate more than 1,500 firms/organizations.

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