Can a landlord terminate a commercial lease because of a failed background check?

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

An award-winning small business attorney in New York City, Nina is a sought-after professional speaker and Entrepreneur Magazine online contributor. She is the go-to counsel for knowledge economy and creative companies, delivering legal services and educational resources that save them time, money, and aggravation.

Posted on May 6, 2015 in Business Transactions

Q.:  I have a commercial lease for office space with a business.  One of the partners failed a criminal background check. If I terminate the commercial lease, but re-sign with the two who did pass, can the excluded partner come after me?

 

A.:  As a landlord, you have the right to carve out certain conditions in the commercial lease for your premises—such as a clean criminal background check or a credit check.  If you did not carve out these exceptions, you do run the risk of breaching your commercial lease—particularly if the corporate tenant has been paying its rent timely, not creating a fuss, and the criminal activity has little to do with current operations (e.g., one of the partners was busted for DUI 8 years ago).

You may be able to work out an agreement with the tenant company whereby they voluntarily agree to leave (“surrender”) the office space, so that you can take back the office space without a fuss. If that’s the case, you’d want some assurances from the tenant’s owners that they have sufficient voting rights and authority to make that decision—with or without the 3rd partner. But all that should be clearly documented. Make sure you have able legal counsel helping you through this.

 

What other law questions do you have about commercial leases and office space?

 

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