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Commercial Real Estate Investment/Landlord using my space for other things

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Expert: - 5/15/2009


Question
QUESTION: I vacated my retail space 18 months before the lease expired and continue to pay on a payment plan.
The landlords use my space for various things without my permission, without compensation and without terminating my lease first. The first time they did this was about 6 months before my lease expired.
My friend said that I should consider my lease terminated the first time the landlords occupied the space and handed copies of my keys to other tenants.
I am making a big list of items to use as a negotiating tool to reduce my outstanding balance (and be free again!).
What do you think of my friend's comments?

ANSWER: J Rod-

The specifics of the wording of the "payment plan" you signed with the landlord could have a major impact upon your friends suggestion about considering the lease terminated.  Your friend could be correct if there is no written or signed "payment plan" and also could be completely wrong depending upon the text of the payment plan or other written agreement you have signed with the landlord.

-Jim

---------- FOLLOW-UP ----------

QUESTION: What a fast reply!

The payment plan is really a credit card authorization slip with my credit card info and the following:

"I, hereby authorize {credit card machine Inc} to charge my credit card for and behalf of {Landlord Partnership} in connection with current lease of retail space {shop address}
The payment should be applied against the debt of past rent, cam and promotional funds due as described in the lease commencing April 1, 2004.

Amount : $1,000 One thousand dollars
Time Period: to be charged every thirty days until debt is cleared"

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Answer
J Rod-

Why did you vacate the premises if you are going to have to pay the rent anyway?  You must have gotten something in writing that both of you signed that said what the agreement was between you both.

Somewhere something has to describe what the agreement is.  If you could stay in the space I assume you would have stayed.   If you couldn't pay the monthly rent any longer you must have written something that says that you agree to vacate the premises and that you will repay the landlord at the rate of $1,000 per month until $X amount is repaid.  Otherwise, how do you know when to stop letting the landlord take $1,000 per month?

Do you keep track of how much you have paid the landlord in total?  There has to be something that controls what happened, how your debt is determined, and says that the landlord has agreed to allow you to terminate your lease as of X date, etc.   That agreement would say that you no longer have any right to occupy the premises, etc.

Isn't there something like this in writing?  Perhaps life in the Virgin Islands is getting a bit too relaxed.  Where in the Virgin Islands was your shop?  St. Thomas where the cruse ships come in? St. John?  St. Croix?

-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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