Posted by: wlubake | November 5, 2009

Eviction of a Commercial Tenant in Texas

Commercial landlords are increasingly finding that their tenants are unable to meet the obligations of their leases.  While one option is to negotiate concessions to help the tenant during this troubled time (as discussed in more detail here), another option is to declare the lease in default and proceed to evict the tenant.

First, a landlord must consider whether eviction is the best course of action.  It will be important for the landlord to look at the potential market for the space - were it to become available – and determine whether a market lease to a new tenant would be more favorable than modifying the existing lease with the defaulting tenant.

Once the landlord has decided to evict, it must be careful to document the entire process in order to prevent a wrongful eviction defense or counterclaim from the tenant.  The first item of documentation the landlord should consult is the lease.  For most commercial leases, the procedure for determining a default, and the remedies available to landlord for tenant’s default, will be clearly spelled out.  Also, it will be important to make sure landlord has a fully executed copy of the lease.  If a court proceeding of eviction is required, it will be necessary to produce evidence of the landlord-tenant relationship between the parties.  The lease is the best evidence of such relationship.

If the lease is for a specified term (as opposed to an “at will” lease), tenant will need to have breached a specific provision of the lease for landlord to terminate and evict.  Most often, this breach will be tenant’s failure to pay rent when due.  Landlord’s should take particular note of the lease’s default provisions to see what obligations exist with respect to delivery of default notice, tenant’s right to cure, and applicable time periods for each.

Once a default has been identified pursuant to the terms of the lease, the landlord must serve the tenant with a notice to vacate the premises.  In Texas, this document must include the following items:

1. Landlord’s demand that tenant leave the premises and return possession to landlord;

2. A clear identification of the property or premises subject to the notice;

3. A deadline for tenant to comply – in Texas this is at least a 3 day period; and

4. Demand for monies owed to landlord, including rent and attorney’s fees associated with collection and eviction.

In Texas, delivery of the notice to vacate can be made in person, by mail, or by posting notice on the inside of the primary entrance door of the premises.

Once the time for compliance has passed, and tenant continues to refuse to give up possession of the premises, the landlord is in position to pursue action in court for eviction (also referred to as “forcible detainer” in Texas).

In such an action in Texas, the landlord must establish that (i) it has an actionable landlord-tenant relationship, (ii) breach of the lease has occurred, (iii) proper notice to vacate was given, and (iv) the time for compliance with the notice has passed without tenant vacating the premises.  Once these items are successfully proven, the court will issue a writ of possession.  A writ of possession is a judgement verifying landlord’s exclusive right to the premises.

Generally a Texas landlord would enforce a writ of possession by having a sheriff or constable execute the writ.  Under Texas law, the sheriff or constable may use reasonable force to remove the tenant from the premises.

Keep in mind that this process is Texas-specific, and each state’s law may change the procedure or requirements.  This article is not intended to substitute for the advice of an attorney. However, reviewing the process involved in a Texas eviction can help a landlord think about the level of documentation necessary to successfully complete a lawful eviction.  No commercial landlord wants to find itself in a situation where it must evict a tenant.  Being as prepared as possible, though, will make the process much smoother if it ever does arise.


Responses

  1. I am currently negotiating rental of retail space. My lawyer advised me not to sign the lease if two matters were not changed in the lease, one of which concerns the wording about due rent. My lawyer indicated that the wording in the lease gives me no protection from having my doors locked if my rent is not received on due date….My brokers rewrote, using the lawyers words, to give notice if rent was not received (different wording was used, but this is the basics)….wording was rejected….however, where can I find the law indicating 3 days notice must be gived? Thank you for your help. I have been working on gettig this lease for over 3 mo now…it is just a 3100 sq ft space.

    • Sandy,

      The section I was referring to was 24.005(a) of the Texas Property Code, regarding a Landlord suit for forcible detainer.

      I would also suggest having your lawyer consider section 93.002(f) regarding cure of defaulted rent and reentry into the premises.

      Finally, representing landlords, I understand the concern of having rent paid promptly. As a landlord, you don’t want to have to give notice every month and wait 10 days for rent payment. It is costly and hurts cash flow.

      However, our clients often prove flexible on these matters (particularly with a creditworthy tenant). A common resolution we use is to require timely payment, but provide notice and 5 days to cure. However, that cure is qualified by only being available if tenant has not missed a regular payment deadline within the past 12 months.

      Therefore, every 12 months or so, you would get a “goof-up” exception for missing the rent deadline, whereby landlord would notice tenant and give opportunity to cure.

      You and your lawyer are correct to protect against the risk of immediate default upon a late rent payment. Things happen sometimes that can cause an unanticipated delay. If your landlord is serious about bringing you in as a tenant, I suspect there will be some flexibility on its part to accomodate your concerns.

      I suggest you talk this over further with your lawyer. I have only heard this piece of the puzzle, and there might be much more at play. As I am not your lawyer, with full information, the points I note above should not be used without further advice from your attorney.

      Thanks for stopping by the blog.

  2. Thank you…This was discussed at length with my attorney and his wording was dismissed…there was mention in his words that more than two notices in any given year would be given….I do understand the landlord’s position…I have seven children…give an inch, they will take it most of the time…Of course my intentions are to pay on time. Goodness, a lease is quite complex…seemingly more so since my first and second visit with the lawyer.

    Your site is very informative. Thank you,…strength in your days

    • Oops…no more than two notices would be given.

  3. I am a bit confused about evictions. Is Ch 93 of the property code the only rules for commercial evictions? Are there others that go with it?
    We were locked out with no notice that we were in delinquent. Our records don’t show the amount they say. I though they had to give a notice or go to the jp to lock us out.
    They wouldn’t allow us to go in to get the perishables. They said they would get them. But they don’t answer phone calls. I think I lost a lot of food.

    • Alvie,

      I am sorry to hear about your situation. No, Chapter 93 is not the only source of information on commercial evictions. In fact, for many leases, the lease itself will be the primary resource for determining what rights the landlord has to lock out a tenant.

      I might suggest that you retain an attorney to review your lease and explain your options given your unfortunate circumstances.

      Best of luck!

  4. Brian – thanks for your blog. I am an Indiana property manager, managing a Texas property for an Indiana Landlord.

    We have a retail tenant in default of their lease for non-payment of rent. We have sent them a default notice with a 5 day cure period (which has expired). The lease (standard retail Indiana lease) allows for Landlord to lock-out tenant, but I know from many years in the business that in certain states, State Law does not always allow lock-outs even if they are agreed upon in the lease agreement and if the Landlord does so (without due process) they open themselves up to a countersuit.

    Does Texas allow for the Lease language to stand or is there a State statute that doesn’t allow for lock-outs. If we can do the lock-out (without eviction proceedings) is there any steps to follow?
    Any advice would be appreciated.

    • Lisa,

      I apologize for replying so late, and expect your situation has played out. Without knowing the specifics in your Indiana form lease, I can say that our leases have provided for lockout rights in a commercial context, and that our clients have been able to enforce those rights in Texas.

      Thank you for reading.

  5. i was given notice to leave my business the next day,as icould not come up with the $4000 my landlord demanded, so he gave me 18 hours to remove all my business equipment ie “”restaurant”"I had offered to pay the 1850 rent that was due for this month but he still went ahead with eviction, when i arrived the next morning . they were in the shop, looking through my stuff and changing the locks

    • Brian,

      I am sorry for the late reply, and am sure that this unfortunate situation has played out by now. I’ve had issues with my comments and just have been able to approve and reply.

      Your situation certainly sounds inconsistent with most leases I draft and review. I would have an attorney look at your notice rights and possibly have an accountant/auditor determine whether the landlord was justified in seeking the $4,000. As you’ve described the situation, it certainly seems that the landlord has been more aggressive than the standard lease would permit.

      Best of luck, and I again apologize if my response has come too late to help you in this instance.

  6. You you should change the webpage name Eviction of a Commercial Tenant in Texas The Commercial Leasing Law Blog to more specific for your blog post you create. I liked the the writing all the same.

    • Thank you for the suggestion. I’m always striving to make my post titles as “on the nose” as possible so that readers know what they are getting.

  7. We owned a family operated business which our lease fell behind and we decided to close the business. We contacted the landlord of our intention. The landlord said, that he was in the middle of selling the building!
    He locked us out to include all of our equipment along with leased equipment that we owned! After I contacted him trying to get our stuff out! He said that the person buying the building wanted it with the equipment! So it was sold that way! He did say we could get some personal stuff out but, no furniture, equipment, china, storage racks, and etc… I told him again that we owed on many of those things! He said on the things we owned out right that if we gave him china, glassware, racks, stainlees tables, that we could get the flat grill and dance floor!

    What’s our rights!

    James

    • Unfortunately, in Texas and many other states, a landlord has a statutory lien on the tenant’s equipment to cover the unpaid lease obligations. On top of the statutory lien, a lease will often contain a separate contracutual lien. A landlord’s lien will generally not be superior to a pre-existing lien, however, such as the equipment on which you still owed money (assuming the selling party retained a lien to secure payment). It sounds like there are several moving parts to your scenario, and a laundry list of variables including state law issues and lease language. I would suggest that you review your lease with an attorney in your jurisdiction to determine your rights.

      I’m very sorry to hear that this has happened to you and your business, and wish that I could provide more guidance. Best of luck moving forward.

  8. I am a commercial landlord with a national brand tenant, with 4 years remaining on the lease. In Sept. ’10 the tenant filed voluntary bankruptcy affecting 3000 store locations. It is anticipated that the tenant will emerge bankruptcy in April ’11. During bankruptcy, the tenant has successfully cancelled several hundred unexpired leases, but has not petitioned for cancellation of my lease. The tenant has failed and refused to pay all pre-bankruptcy expenses, including 9 months of property taxes and a the part of the rent accrued between Sept 1 and Sept 17 (the date of filing). The total amount owed me is over $10,000. After the filing the tenant has made all payments without further breach.

    The lease specifically provides that the filing of bankruptcy constitutes a “material breach” of the lease. Additionally, the lease cites late payments or failure to pay monies owed as examples of material breaches.

    Question: May I evict the tenant for its breaches or does the bankruptcy filing preclude such action? If the tenant emerges bankruptcy without cancelling the lease, am I obligated to honor it? Thanks.

    • Larry,

      If you have not already done so, I suggest you review my prior post on leases during a tenant bankruptcy: http://leaselaw.wordpress.com/2009/10/07/commercial-leases-in-a-tenant-bankruptcy/.

      It appears that you have rights to collect past due amounts, but in bankruptcy, such claims should be persued through the bankruptcy court. I would not evict a tenant in bankruptcy without first consulting an attorney who specializes in bankruptcy law and procedure.

      I hope this provides some guidance. Good luck.


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