Breaking a Lease Subtenant wants to break the lease

[Dcoria]

Jurisdiction

Texas

I am renting a commercial property and found a subtenant to assume the lease on my behalf for the remainder of the contract between the landlord and myself. This was approved be the landlord. A contract was signed by myself and the subtenant. The subtenant has always paid rent on time and is up to date with their payments but has notified me they will not be paying rent for next month and will be vacating the premises before the end of the month. Their reason for leaving is because business is slow and they don't want to continue. This is only a 6 day notice to leave and the lease still has another 6 months left on the contract. As the sublandlord can I legally seek to recover the future unpaid rent from the subtenant? Also are any lock out provisions subject to the original lease and only permissable after the subtenant fails to pay rent?

 

[adjusterjack]

As the sublandlord can I legally seek to recover the future unpaid rent from the subtenant?

Of course. You are his landlord. He is your tenant.

Your landlord may have approved the sublease but I doubt if he released you from your obligations on your own lease so you will have to keep paying the rent after your tenant stops paying you.

Also are any lock out provisions subject to the original lease and only permissable after the subtenant fails to pay rent?

Texas has a commercial landlord tenant statute:

2015 Texas Statutes :: PROPERTY CODE :: TITLE 8 - LANDLORD AND TENANT :: CHAPTER 93 - COMMERCIAL TENANCIES

And allows lock outs for non-payment of rent as you can see by Section 93.002.

However, it also says that a lease provision supersedes those statutory provisions.

Though I can't imagine what your lease might say that will allow you lock out your tenant if he is still paying rent through his termination date. In other words you can't lock him out between now and the end of the month if he's paid rent through the end of the month.

I'm afraid you will just have to wait until he is gone to sue him for any further rent and costs.

Unfortunately, you might not be able to collect for the remaining 6 months because Texas statute Section 91.006 requires you to mitigate your damages:

2015 Texas Statutes :: PROPERTY CODE :: TITLE 8 - LANDLORD AND TENANT :: CHAPTER 91 - PROVISIONS GENERALLY APPLICABLE TO LANDLORDS AND TENANTS

That means you have to find a new sublessee as soon as reasonably possible with the same terms and conditions as your previous sublessee and then you can sue for the rent for the period from his termination to your re-rent date.

 

[army judge]

As the sublandlord can I legally seek to recover the future unpaid rent from the subtenant?

You certainly can take the person to JP Court (or Muni Court) depends on where the property is located.

Bottom line, yes, you can sue for unpaid rent.

As "AdjusterJ" said, and you might already know, you have a duty to mitigate your damages.

That means you must aggressively, actively seek another tenant.

Your current tenant is probably unable to pay, and might even file bankruptcy. If a BK is filed, you can forget about recovering a dime. In the meantime, you're on the hook until you get a sucker, err "tenant" to lease the property.

That means when your tenant fails to pay, you're on the hook to pay your LANDLORD!

If you fail to pay, you'll probably be sued.

No, you can't claim your tenant won't pay as an excuse for you not to pay.
That's the flaw with getting a sub-lessor.
If the sub-lessor fails to pay, or defaults, you as the LESSOR remain the obligor to the real LANDLORD.


Good luck, hope you get it all sorted.

 

[Dcoria]

Thank you both. Those were my assumptions. I was actually notified by my landlord of their intent to vacate prematurely and fully understand my financial responsibility should the subtenant in fact leave. Immediately after I was notified I began trying to find an additional tenant to take over the lease. Nothing yet, a few prospects, but still hopeful. I have since spoken to the subtenant and their co-signer to remind them of their obligations, and have tried to work out a deal to prevent having to battle legally. Don't really want to take this to court, but at least if it comes to it I have the possibility of recovering the rent that is not paid while I find another subtenant. In terms of bankruptcy, don't think they will but if the subtenant does, am I able to go after the co-signer? Their business is listed as a general partnership with the co-signer listed as 50% owner. It is my understanding that the because the business is not listed as corporation or an LLC, the individual owners file for bankruptcy and not the entire business, is this correct?

 

[Dcoria]

adjusterjack, thanks for the links. Very informative!

 

[adjusterjack]

It is my understanding that the because the business is not listed as corporation or an LLC, the individual owners file for bankruptcy and not the entire business, is this correct?

Yes.

You rented to two individuals. Even if your lease didn't say "joint and several" (google it), as mine always did, the presumption is joint and several which means if one doesn't pay or goes bankrupt you go after the other.

I was notified I began trying to find an additional tenant to take over the lease. Nothing yet, a few prospects, but still hopeful.

Make sure you carefully document all of your efforts. Keep copies of your ads. Make note of the names, addresses and phone numbers of anybody who inquires about the place in case the contact needs to be verified. Make notes of the times and dates of any showings of the property.

Unfortunately, this is not the time to make any improvements in your lease because, to mitigate, you have to show that you offered prospective tenants the same rent, deposit, and terms as the breaching tenant had.

Market factors may make it impossible for you to re-rent for a long time, maybe even until the end of the lease (hope not) but you can still justify suing for the entire amount if you have carefully documented your efforts to re-rent.

You might also hedge a bit by engaging in written correspondence with prospective tenants to confirm conversations and get them to respond with written questions about the property, even if they decide not to rent it.

If you end up suing and the former tenants defend on the basis of lack of mitigation, the more documentation you can show a judge, the better you will fare.

Don't really want to take this to court,

As a landlord, you never want to say that or even think that or even look like you are reluctant to take this to court. Your game face should always look like the words "sue happy" are written across your forehead.

I had rentals for twenty years and never hesitated a moment in suing deadbeat tenants.