Commercial Lease Default in Florida

I just recently defaulted on a 12 months office lease, I had 7 months remaining, and I was contacted by an attorney representing the Landlord in which they offer me to pay the remaining balance of $3,500 plus on monthly payments which will take me about 3 years to pay for, but I feel that the landlord will rent the office space in no more than 3 months so they will collect the money from me and new tenant, I don't have a lump sum to negotiate any agreement other than no more than $125 per month, any suggestions in what I could do, what are my rigths, obviousley my business failed, the lease was under an LLC but I signed a personal guarantee also, should I let the landlord filed a judgment, will I have to pay less that way? I have not been able to find any Florida Statues or info, do they have just the right to collect what they loose if they are not leasing the office?
I do not like the following in the contract:

In the event of Default, OSP shall be entitled to file a lawsuit against DEBTORS and shall be entitled to obtain a Final Summary Judgment in that lawsuit in its favor and against DEBTORS, solely based upon this Settlement Stipulation, for the full principal sum of $3,549.33, less any payments received, plus pre-judgment interest at the statutory rate allowable by law, per annum, since the date of the original default which gave rise to this Stipulation, as well as all costs involved in the filing of the suit and reasonable attorney's fees to be determined by the Court.

The landlord has the obligation to mitigate his/her damages by re-renting the place. When they do they can not collect rent from you and them.

I totally agree about not signing a contract with that clause in it. I would strike it unilaterally before signing it. If they don't like it they can go get a judgment.

Further I would add somewhere in the contract that the amount you agree to pay will go down by an amount equal to any rents they collect on the property if it is released during your term.

Remember, unless your lease specifically provides for legal costs, they are unlikely to be able to make you pay their costs of litigation if you have reasons for not settling. Use that against them in that you only owe them $3500. Going to court would eat that up in a hurry.

Any follow up questions?

Here is a copy of the settlement that they sent me,I have one question, how would I know when they rent the office again or not, and I'm just a little bit confused about if it may be better for me to wait and not sign nothing yet or make changes to the settlement that they offered me. I would appreciate your response and or opinion. Below is a full copy of their proposal.


SETTLEMENT STIPULATION

Come now the parties, Office Suites Plus, Inc., (hereinafter referred to as "OSP") and MITIGATION CONSULTANTS OF AMERICA, LLC. and DEBTORS (hereinafter referred to as "DEBTORS") and stipulate and agree as follows concerning that certain debt owed to OSP, in the sum of $3,549.33:

1) DEBTORS agree to pay and OSP agrees to accept the sum of $3,549.33 payable pursuant to the following schedule, as settlement in full of the instant cause:

The sum of at least $125.00 beginning on the 1st day of December, 2009, and continuing for six (6) months with the last $125.00 payment due on May 1, 2010. The sum of at least $150.00 beginning on the 1st day of June, 2010 and continuing for 18 months with the last payment due on November 1, 2011. The final payment of $99.33 will be due on December 1, 2011.

2) All payments are due as outlined above and should be made payable to Manno & Dinnerstein, P.A., and sent to 950 S. Pine Island Road, Suite A-150, Plantation, Florida 33324. In the event the due date falls on a weekend or holiday, then the payment shall be due on the weekday immediately preceding.

3) By executing this Stipulation, DEBTORS hereby admit that DEBTORS are responsible for, and in debt to OSP for $3,549.33. By executing this Stipulation, DEBTORS also hereby admit that this may be a compromised settlement amount and that any Default will result in the full amount, less any payments received, being due and owing to OSP.

4) In the event of Default, OSP shall be entitled to file a lawsuit against DEBTORS and shall be entitled to obtain a Final Summary Judgment in that lawsuit in its favor and against DEBTORS, solely based upon this Settlement Stipulation, for the full principal sum of $3,549.33, less any payments received, plus pre-judgment interest at the statutory rate allowable by law, per annum, since the date of the original default which gave rise to this Stipulation, as well as all costs involved in the filing of the suit and reasonable attorney's fees to be determined by the Court.

5) DEBTORS agree the proper venue for any such lawsuit be in the Magistrate Court of Fulton County, Georgia, and DEBTORS specifically agree to the domestication of any Final Judgment obtained, either by Default or otherwise, in any State or jurisdiction desired by OSP and agree to pay all costs and attorney fees expended by OSP to obtain such domestication as well as all costs and attorney fees expended for execution upon same.

6) The filing of any legal proceeding by OSP against DEBTORS, shall be stayed pending compliance by DEBTORS with this agreement.

Ok, just because your company is down, don't think you are not a business negotiator. Make a counter offer. Remember the first rule in negotiations is that you always tend to think that you have the weaker side. That is not always the case. $3,549.33 is the full amount that you would owe them so it is really your worst case scenario unless your original lease provided for attorney fees then you are looking at another $1200 or so for reasonable fees.

First, I would keep an eye on the place to see if they have rented it. Secondly I would look to see if they are actively attempting to rent it. Third, I would talk to a commercial real estate broker in the area to find out about 1 and 2 from them and ask them how long one might expect it to take to rent out that space if they are actively trying. Get them to write you a letter about 1, 2 and 3 even if you have to pay them a little to do it.

Counter the proposed settlement by paying the number of months rent that the broker suggests that it would take to release the space. If you are right about 3 months at $500 a month ($3500/7=500/mo?), then counter with $1500 less any security deposit you paid at the beginning of the lease. Don't forget that. Unless they notified you of damage to the property you are due a refund of that money.

Further, I would NEVER agree to venue being in Fulton County Georgia when both the property and you are in Florida. Your county is the venue and the state law is Florida law not Georgia law.

I would not agree to pay "all costs and fees" (they don't even say all reasonable costs and fees). I would not agree to pay "all attorney fees." Don't give them items that they don't already have.

So now, look at the position they are in: They can take the $1500 which is based on some evidence (that the broker states they could mitigate their $3500 loss). It leaves them with a $2000 difference. So now they can take the $1500 or fight for $3500. To fight for the $3500 they have to travel to Florida, have a Florida attorney and risk the idea that a judge will agree with you about a "reasonable" amount of time to rent the property in order to mitigate their loss.

I would not settle for anymore than $2000 paid over the 3 year term with no automatic clause for summary judgment or agreement for venue out of the state.

Don't make their life any easier than it is by agreeing to all of these things. Get the margin between what you are willing to do and what they want down below their costs of coming after you plus the risk of losing and they will settle.

You will be even better off if you can offer $1500 and send a check along with the settlement offer. You can find $1500 from someone and pay them back. It will be worth your time. Questions?

Commercial Lease Default in Florida Reply to Thread

Thank you so much, you gave me the best advice

Commercial Lease Settlement

jharris352 said:

Ok, just because your company is down, don't think you are not a business negotiator. Make a counter offer. Remember the first rule in negotiations is that you always tend to think that you have the weaker side. That is not always the case. $3,549.33 is the full amount that you would owe them so it is really your worst case scenario unless your original lease provided for attorney fees then you are looking at another $1200 or so for reasonable fees.

First, I would keep an eye on the place to see if they have rented it. Secondly I would look to see if they are actively attempting to rent it. Third, I would talk to a commercial real estate broker in the area to find out about 1 and 2 from them and ask them how long one might expect it to take to rent out that space if they are actively trying. Get them to write you a letter about 1, 2 and 3 even if you have to pay them a little to do it.

Counter the proposed settlement by paying the number of months rent that the broker suggests that it would take to release the space. If you are right about 3 months at $500 a month ($3500/7=500/mo?), then counter with $1500 less any security deposit you paid at the beginning of the lease. Don't forget that. Unless they notified you of damage to the property you are due a refund of that money.

Further, I would NEVER agree to venue being in Fulton County Georgia when both the property and you are in Florida. Your county is the venue and the state law is Florida law not Georgia law.

I would not agree to pay "all costs and fees" (they don't even say all reasonable costs and fees). I would not agree to pay "all attorney fees." Don't give them items that they don't already have.

So now, look at the position they are in: They can take the $1500 which is based on some evidence (that the broker states they could mitigate their $3500 loss). It leaves them with a $2000 difference. So now they can take the $1500 or fight for $3500. To fight for the $3500 they have to travel to Florida, have a Florida attorney and risk the idea that a judge will agree with you about a "reasonable" amount of time to rent the property in order to mitigate their loss.

I would not settle for anymore than $2000 paid over the 3 year term with no automatic clause for summary judgment or agreement for venue out of the state.

Don't make their life any easier than it is by agreeing to all of these things. Get the margin between what you are willing to do and what they want down below their costs of coming after you plus the risk of losing and they will settle.

You will be even better off if you can offer $1500 and send a check along with the settlement offer. You can find $1500 from someone and pay them back. It will be worth your time. Questions?

Click to expand...

What do you think about this modified settlement Stipilation,(I would appreciate your opinion)

SETTLEMENT STIPULATION

Come now the parties, Office Suites Plus, Inc., (hereinafter referred to as "OSP") and MITIGATION CONSULTANTS OF AMERICA, LLC. and DEBTORS (hereinafter referred to as "DEBTORS") and stipulate and agree as follows concerning that certain debt owed to OSP, in the sum of $1,750:

1) DEBTORS agree to pay and OSP agrees to accept the sum of $1,750 payable pursuant to the following schedule, as settlement in full of the instant cause:

The sum of at least $125.00 beginning on the 1st day of December, 2009, and continuing for six (7) months with the last lump sum payment of $875 by July 1st 2010.

2) All payments are due as outlined above and should be made payable to Manno & Dinnerstein, P.A., and sent to 950 S. Pine Island Road, Suite A-150, Plantation, Florida 33324. In the event the due date falls on a weekend or holiday, then the payment shall be due on the weekday immediately preceding.

3) By executing this Stipulation, DEBTORS hereby admit that DEBTORS are responsible for, and in debt to OSP for $1,750. By executing this Stipulation, DEBTORS also hereby admit that this may be a compromised settlement amount and that any Default will result in the full amount, less any payments received, being due and owing to OSP.

4) In the event of Default, OSP shall be entitled to file a lawsuit against DEBTORS, solely based upon this Settlement Stipulation, for the full principal sum of $1,750, less any payments received, plus pre-judgment interest at the statutory rate allowable by law, per annum, since the date of the original default which gave rise to this Stipulation, as well as all costs involved in the filing of the suit and reasonable attorney's fees to be determined by the Court.

5) DEBTORS agree the proper venue for any such lawsuit be in the Magistrate Court of Hillsborough County, Florida, and DEBTORS specifically agree to the domestication of any Final Judgment obtained. DEBTORS agree to pay all reasonable costs and attorney fees expended by OSP to obtain such domestication as well as all reasonable costs and attorney fees expended for execution upon same.

6) The filing of any legal proceeding by OSP against DEBTORS shall be stayed pending compliance by DEBTORS with this agreement.