When a commercial tenant fails to pay rent or is otherwise in breach of the lease agreement, landlords may have the option of locking the tenant out of the leased property. In some cases, landlords and tenants will be able to resolve their issues before this action becomes necessary. In others, the landlord may feel that they have no choice but to bar the tenant from reentering the premises. In this situation, it’s essential to know: When can a commercial lease tenant be locked out?
Look to the Lease Language
In many cases, commercial landlords and tenants will use lease language that provides that the tenant will pay rent and abide by other terms that are specific to the property and the parties. The two sides may add provisions that will later impact the landlord?s ability to lock the tenant out of the premises. It is crucial to analyze the lease agreement as it may have terms that are different from those provided by the applicable statute. It may be more restrictive as to available landlord remedies and the notice requirements. Before taking action, you will want to review the terms of your commercial lease to determine if there are any limitations.
Landlord Lock-out of a Commercial Tenant
Arizona law provides that when a commercial tenant fails to pay rent for five days or breaches any material lease terms, the landlord ?may reenter and take possession or, without formal demand or reentry, commence an action for recovery of possession of the premises.? The landlord can take the matter before a court by filing a forcible detainer action. These cases must be tried not less than five nor more than thirty days after commencement. When these matters go before a court, the court will determine the right to actual possession and may also assess damages, attorney fees, and costs.
Further, under the law, if the tenant fails to pay past due rent, ?the landlord shall have a lien on and may seize as much personal property of the tenant located on the premises and not exempted by law as is necessary to secure payment of the rent.? If the rental debt is not paid within sixty days after the seizure, the landlord can sell the tenant’s personal property. If the commercial tenant assigned or sublet the property, the landlord will have the same enforceable rights against the assignee or sub-lessee as the original tenant.
Limitations on Lock-outs
Although a commercial landlord may have the right to lock-out a defaulting tenant, there are some limitations. The default must be a material breach of the lease. Further, landlords are not permitted to lock tenants out when they are physically occupying the premises. Additionally, landlords must not ?breach the peace? when conducting a lock-out.
One fact to consider is whether the landlord has routinely accepted late payments from the tenant. If the landlord allowed the tenant to pay late several times without consequence, the landlord might be viewed as having waived the right to act on this portion of the lease as a default.? A landlord may be able to reestablish their expectation of receiving timely rent payments, but they would have to wait for the tenant to fail to pay after the expectation was put back in place.
Taking Other Steps
Locking a tenant out of a rented commercial space is an extreme remedy often used as a last resort. You should assess what other options may be available before proceeding with a lock-out. Further, seizing a tenant’s personal property may not be clear-cut. If the tenant doesn’t own property, a landlord cannot take it during a lock-out. Often, determining what belongs to a tenant and what does not can be difficult. Further, the sale of the tenant’s personal items may not be enough to compensate you for the unpaid rent and your other expenses.
Locking a commercial tenant out of a property can have unintended consequences for the landlord. Before taking this action, you should consult with an experienced Arizona real estate attorney who can help you assess your situation and evaluate your options.
Laura B. Bramnick is an Arizona real estate attorney with the knowledge and experience you need to protect your interests during every stage of your commercial real estate matter. If you are seeking an exceptional, client-driven real estate lawyer in Scottsdale, Phoenix, Sedona, and throughout the State of Arizona, contact Laura B. Bramnick to schedule your consultation.