Commercial Leases with no Rent forthcoming

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    Commercial Leases with no Rent forthcoming

    Hi,

    I have a couple of commercial shops which are on long-term Leases. Both retail tenants have stopped paying the rent during the pandemic, even though they have been open for considerable periods. One is refusing to pay rent until we agree to a waiver of all arrears and to reduce the rent by 30% for remaining 10yrs of the lease. They are refusing to make any payments until these terms are agreed. The other is simply not paying at all and refuses to enter any dialogue. As a result I have lost over £180,000 in rent over the past 18 months and now stand to lose everything I have worked fir in my entire life. Both properties are mortgaged to the bank who are threatening to foreclose on the basis we do not meet their minimum income requirements for our loan, and also our capital repayment holiday will expire and they are refusing to extend. Me any my family are at our wits end and threaten to lose our homes and all our futures. Is there anything we can do as we will not be able to survive another few months let alone until March 2022. We feel that through no fault of our own, we will lose everything we have built iver 40yrs, and have no recourse to any legal action. The bounce back loan is only a drop in the ocean compared to the rents we have lost and continue to lose as long as this moratorium continues. Both tenants are trading and are able to pay their rent but refuse to do so. We are DESPERATE for help and really would like some advice.

    #2
    Yes ! issue money claims against your tenants. They will cough - probably - when they get the summons. The Coronavirus Act prevents you applying for possession but you would be able to get a money judgement , Most people would rather not have a CCJ

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      #3
      I know (to a certain degree) what you are going through, I had Commercial Properties which I rented out to two tenants and assuming that they would be honourable people and pay the rent (which I would live off) retired and went to live overseas. I believe both tenants had discussions over how to screw me over. One went into Liquidation owing rent.
      They are messing you about, perhaps knowing that you are in a vulnerable financial position.
      You need a really good solicitor. Surely though If a Commercial Rent is not paid you can send in the Bailiffs immediately. (I did) And let them know that due to unpaid rent you want to foreclose. You could also get a Commercial Estate Agent put a For Sale sign up. That will wake them up. Good Luck.

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        #4
        Piffy's knowledge / suggestion is with respect outmoded. Under the Coronavirus Act 2020, the moratorium on eviction also restricts CRAR (use of bailiffs to recover unpaid ent). Also putting up a 'for sale' sign whilst a lease is in force is ok if the lease permits and it it the investment (ie sale subject to the existing lease) that is offered but suggesting sale with vacant possession when a lease is in force would be slander of title.

        I find it strange that jif007 has not sought legal advice on rights and remedies. Subject to the level of rent, Issuing proceedings in the High Court or a lower court with a pre-action protocol letter should do it. As flying freehold says, "Most people would rather not have a CCJ." If that doesn't work then renegotiating / restructuring the leases should be explored, even if that means lower rents. the bank's minimum income standard for the loan would be a factor but surely the minimum is less than the rents you are (supposed to be) getting? If not then sounds like a gamble that hasn't paid off?

        A downside of mortgaging investments is that without any money from other sources to pay the mortgage the investor is dependent upon the tenant paying. As the lease term shortens, particularly on renewal when tenants will not commit to a longer term, the risk too is that the loan-to-value covenants would be breached.

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          #5
          Originally posted by flyingfreehold View Post
          Yes ! issue money claims against your tenants. They will cough - probably - when they get the summons. The Coronavirus Act prevents you applying for possession but you would be able to get a money judgement , Most people would rather not have a CCJ
          Would this still be possible if the lease is in the name of a LTD company?

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            #6
            Of course it would. No company wants a cCJ

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