The 7-Step Guide to Conducting a Commercial Eviction

Let's face it, no one gets into the commercial real estate game hoping to evict tenants. But sometimes, even with the best tenants, things go sideways, whether that's through missed rent payments, zoning issues, or something else.

When that happens and you find yourself in the uncomfortable position of having to evict a business, you better know what you're doing. Having a solid handle on the eviction process for commercial properties is wise for any landlord or property manager.

This article covers the details of commercial lease evictions, guiding readers through the process from violation to resolution. It explores common lease breaches that can trigger an eviction, the different commercial lease types, and the legal steps landlords must follow.

For those situations where evicting a commercial tenant becomes necessary, this article serves as a guide. You'll gain an understanding of the process so you can approach even the most challenging eviction scenarios with confidence and clarity.

How commercial and residential tenant rights differ

Unlike residential tenants whose rights are supported by broad statutory protections, commercial tenants' rights largely depend on their lease agreements. Key differences between the two include:

• Legal protections and regulations: Residential tenants enjoy a range of legal protections created for habitability and fairness in rental relationships. This includes restrictions on eviction and requirements for living conditions.
  Commercial leases primarily govern commercial tenants' rights through the contract terms that the landlord and tenant agree upon, resulting in fewer statutory protections for tenants. This makes the commercial leasing process more flexible but also places a greater emphasis on the negotiation skills of the parties involved.
• Lease customization: Landlords and tenants can negotiate commercial leases extensively and tailor them to meet the specific needs of both parties. Terms such as lease duration, rent increases, subleasing rights, and property improvements are often subject to negotiation.
  Residential leases tend to be more standardized, with less room for customization.
• Eviction processes: The eviction process for commercial tenants can be more straightforward and less restrictive than that for residential tenants. Business tenants also tend to have fewer protections against eviction. This means if they breach the terms of the lease or the lease expires, they might have to vacate the premises more quickly.
• Security deposits: Security deposits for commercial leases are usually not capped, but many states have specific laws limiting the amount a landlord can charge a residential tenant.
• Compliance requirements: Commercial properties must comply with specific laws such as the Americans with Disabilities Act (ADA), which requires facilities to be accessible to the public and employees. This compliance can be a shared responsibility or fall solely on either the tenant or landlord, depending on the lease terms.
• Bankruptcy protections: If a commercial tenant goes bankrupt, the impact on the lease and unpaid rent can be quite different from what happens in residential rentals. Commercial tenants may have certain rights to renegotiate the lease terms during bankruptcy proceedings.

Types of commercial leases

Commercial lease agreements are more complex and typically extend for longer terms (5 to 10 years on average) than residential leases. Two common types of leases used by commercial landlords are:

• Gross lease: The tenant pays a fixed rent amount, and the landlord pays property taxes, insurance, and maintenance.
• Net lease: The tenant pays a lower base rent and a portion or all of the property taxes, insurance, and maintenance costs. You can further categorize these into single-net, double-net, and triple-net leases.

Common commercial lease violations

Commercial lease violations occur when a tenant breaches one or more terms of the lease agreement. Here are some typical reasons for such violations:

• Unpaid rent: As a landlord, this is the violation of a commercial lease agreement you're most likely to see. Depending on the terms of the contract, if the tenant doesn't pay rent, it may result in late fees, interest charges, or even grounds for eviction.
• Improper use of premises: Commercial agreements specify the allowable use of the rental space, such as retail, office, industrial, etc. Using it for unintended purposes or operating a business that violates local zoning ordinances would violate the lease.
• Subleasing without permission: Many commercial contracts prohibit or restrict the tenant's ability to sublease all or part of the space to another party. Doing so without the landlord's explicit written consent constitutes a violation.
• Failure to maintain the property: Tenants are typically responsible for keeping the rental space in good condition beyond normal wear and tear. Failure to properly maintain the premises as outlined in the lease, resulting in excessive damage or deterioration, could result in lease termination.
• Unauthorized alterations: Most commercial leases don't allow for major structural changes or significant renovations to the space without the landlord's prior approval. Making unauthorized alterations would violate this provision.
• Violation of laws: Engaging in unlawful or criminal activities within the rented premises or failing to comply with relevant regulations governing that business type would violate the lease terms.
• Default on insurance: Many commercial leases require tenants to carry adequate insurance policies. Failure to maintain the required coverage potentially exposes the landlord to risks, allowing them to terminate.

How to evict a commercial tenant

So, you've found yourself in a position where you have to initiate an eviction. The process for evicting commercial tenants will include:

1. Review the lease agreement

First, review the rental agreement to identify violations committed by the tenant. The lease agreement typically includes detailed information regarding the steps and remedies available in case of an eviction.

2. Provide written notice

Send a formal written eviction notice outlining the specific lease violation to the tenant. The notice should also specify a set time frame during which the tenant must address and rectify the issue or otherwise vacate the property. This document formally communicates the breach and your expectations for resolution.

Be sure to follow any specific notice delivery requirements per local laws, such as sending via certified mail or posting on the premises. You may refer to this letter as a "Notice to Cure" if you expect the tenant to correct the violation or a "Notice to Quit" if you expect them to leave the premises.

3. Allow for a notice period

During the notice period, the tenant has the chance to rectify the breach as stipulated in the written notice. This period allows the tenant to take corrective action to comply with the lease terms, potentially avoiding eviction.

The duration of this period can vary significantly, depending on the local legal requirements and the specifics of the lease agreement itself.

4. File an eviction lawsuit

If the tenant does not correct the lease violation within the designated notice period, you can then initiate an eviction lawsuit. This legal action, commonly referred to as an "unlawful detainer action," is a formal procedure through which the landlord seeks to regain possession of the property by proving the tenant's breach of the lease in court.

Landlords typically need to submit required documents beyond the complaint, such as a summons, rental ledgers, and a copy of the lease agreement. You should also be prepared to pay any court filing fees.

5. Attend a court hearing

During a court hearing in an eviction lawsuit, both the landlord and tenant present their arguments and evidence, such as the lease agreement and correspondence. This stage provides the foundation for a fair and impartial evaluation by a judge, who decides if the tenant's lease violations warrant eviction.

Note that some jurisdictions may require landlords to be represented by an attorney during the court hearing process.

6. Receive court judgement

Based on the evidence and legal standards, the judge decides whether to evict the tenant. If the judge grants the eviction, the court will issue an order for the tenant to vacate the property.

7. Eviction enforcement

If the tenant does not voluntarily move out after the court order, you can obtain a writ of possession from the court, which allows law enforcement to remove the tenant and their belongings from the property.

Immediately after the tenant's removal, change all the locks and take steps to secure the premises properly.

How long does it take to evict a commercial tenant?

The duration of a commercial eviction process can vary significantly, generally ranging from a few weeks to several months. The timeline depends largely on the local legal framework, the efficiency of the court system, and whether the tenant contests the eviction.

Contested evictions tend to take longer, as they involve more detailed legal proceedings, including hearings and potential appeals. The process may also face additional delays in jurisdictions with overloaded court systems.

Grounds for commercial lease termination

A landlord may terminate a commercial lease early under certain legally permissible circumstances, such as:

• Breach of lease by tenant: If the tenant fails to comply with the lease terms, such as not paying rent, the landlord can initiate termination procedures as stipulated in the lease.
• Early termination clause: Some leases include an early termination clause that allows the landlord to terminate the lease under certain conditions specified in the contract.
• Negotiated termination: The landlord and tenant can mutually agree to terminate the lease early. This usually involves negotiation and possibly compensation for ending the lease prematurely.
• Unforeseeable events: If the property becomes unusable due to reasons like condemnation or significant damage not caused by the tenant, the landlord might terminate the lease.

Making commercial property eviction as painless as possible

Knowing the ins and outs of commercial evictions is part of being a commercial landlord. Although we all hope that these situations will be few and far between when renting out a commercial property, having a firm grasp on the processes involved early on in your property investor career can come in handy down the road.

Understanding lease agreements, violation protocols, and legal proceedings can help you confidently and compliantly handle even the trickiest eviction scenarios.

Now equipped with strong communication and this convenient guide, you're ready to manage commercial evictions. The road to running a flourishing real estate business may have its challenges, but approaching evictions armed with this knowledge provides the tools you need to keep things running as smoothly as you can.

Evict commercial tenant FAQs

How long does it take to evict a commercial tenant in Texas?

The eviction process for a commercial tenant in Texas typically takes at least a few weeks. It begins with a minimum three-day notice period before filing an eviction lawsuit, followed by a court hearing set at least 10 days after filing, with a possible writ of possession issued six days after a favorable judgment.

Can a commercial tenant be evicted in New York?

Yes, you can evict a commercial tenant in New York. The process includes notice, a hearing, and the ability to appeal eviction decisions. Landlords must have valid legal grounds for eviction and follow correct procedures.

How long does a commercial eviction take in California?

For an uncontested commercial eviction in California where the tenant does not respond, the timeline can be relatively quick, at 15 to 30 days. But if the tenant fights the eviction through the courts, this can significantly extend the timeline by up to 60 or more days.