Item — HN Reader

> If their tenant goes out of business, they're not getting the back rent and now they'll have a vacancy in a time they're unlikely to find another tenant quickly.

In some cases (I have first hand experience - perhaps it is limited to small businesses), the business owner has to agree to be personally liable (with his/her own personal assets) if the business fails to pay the rent. The business may go bankrupt, but the landlord can still go after the owner's personal assets.

That's one way for the landlord to lower his/her risk exposure.

2 comments

This is my experience as well. My wife and I have a franchise location of a well established multi-national business...If we personally fail they would swoop in and run the location.

But the landlord still had us personally guarantee...There were several empty locations in the plaza so it's not like we were competing w/ others for space. We had some leverage.

Commercial landlords will get their money back, and have the lawyers to do so.

Many commercial leases require the lessee to take out a line of credit sufficient for a few months rent too - no doubt landlords will be calling for those LoCs to taken out.