'Difficult Decisions' Look Set To Arise

The upcoming quarter day will prove a nervous time for both tenants and landlords of commercial properties, according to a leading property litigation lawyer.

Commercial rents are traditionally paid to landlords, in advance, four times a year, on the quarter days. This can result in a large outgoing payment for the tenant, or a major loss of income for the landlord if the rent is not paid.

Danny Revitt, Partner in the Property Litigation team at Irwin Mitchell, suggests that the time could be a difficult one for landlords due to worries over whether the tenant will pay, and what to do if they do not.

For tenants, cash flow problems may arise when a full quarter’s rent is paid in advance, but they risk forfeiture of the lease by the landlord if they can’t pay.

Danny commented: “With the first quarter day of 2011 soon approaching, landlords may be facing some difficult decisions.

“They may be forced to choose between whether to forfeit the lease and risk having an empty property with liability for rates, or to give their tenant more time to pay without any guarantee that they will ever recover from current cash flow problems.

“The best resolution in the current market could be a “better the devil you know” situation where the landlord and tenant try to agree a mutually beneficial way forward for both parties.”

He concluded: “An empty property with no incoming rent and a business with no home isn’t good for either party, so any agreed measures to prevent the situation can only be positive.”