When a tenant fails to pay the monthly rent, or pays it late, this constitutes non-payment of commercial rent. That is a breach of the statutory and contractual obligation to pay. To avoid further problems, it is important that the landlord acts quickly and thoughtfully.
In this article you will discover, among other things:
- what the first step is when the tenant fails to pay;
- when a payment plan is and is not sensible;
- what purpose a formal notice of default serves;
- what options exist if payment still fails to arrive;
- what the role of the court is in cases of non-payment;
- and what interest and compensation are due.
Reminder in case of unpaid commercial rent
The reason for a late payment is sometimes simple: a mistake, an error in the bank transfer or a misunderstanding. The landlord is therefore best advised to first send a friendly written reminder stating the outstanding amount, the account number and the due date.
Investigating possible payment difficulties
Temporary or structural problems?
If a reminder does not help, there is usually more going on. The tenant may be facing temporary payment problems or may refuse to pay. A payment plan can help with temporary difficulties, but with structural problems such an arrangement often leads to mounting arrears. It is therefore important that the landlord monitors the situation closely.
Checking for possible debt burden
If the landlord wants to check whether the tenant is known elsewhere for payment problems and whether other creditors have levied attachments, Handelshuurloket can consult the central register of attachment notices. This helps to correctly assess the tenant’s financial situation and to make sound strategic decisions.
A formal notice of default for unpaid commercial rent
If no payment arrangement is agreed, or if the tenant fails to comply with it, a formal notice of default is the next step. This formal letter must clearly state a final payment deadline and announce that further steps will follow.
It is wise to engage a lawyer to draft this letter. The lawyers of Handelshuurloket can help you with this.
What if payment still fails to arrive?
Amicable termination of the commercial lease
If it turns out that the rent consistently exceeds the tenant’s budget, an amicable termination of the lease may be a solution. In that way both parties avoid additional costs or proceedings. In principle, the involvement of a justice of the peace or a notary is required for this.
Proceedings before the justice of the peace
If no agreement is reached, the landlord can start proceedings before the justice of the peace. The claim usually seeks:
- payment of the rent arrears, and
- termination (dissolution) of the lease for non-payment.
That makes sense when the tenant’s financial situation offers no realistic prospect of repayment. The specialists at Handelshuurloket can advise on whether litigation is appropriate.
The justice of the peace generally orders dissolution when at least two months’ rent is unpaid. Proceedings do take some time, so acting quickly remains important. After the judgment, the dissolution must be served by a bailiff before eviction can take place.
Please note: ordinary notice by the landlord does not suffice in the event of non-payment. The landlord may only give notice on limited grounds, and even then a notice period must be observed. Judicial dissolution is necessary in the event of persistent non-payment.
Interest on late payment of commercial rent
In the event of late payment, default (late-payment) interest is automatically due. It may accrue at the rate of:
- the statutory interest rate, or
- a contractual interest rate.
A contractual interest rate may not be excessively high. If it is, the court can reduce it. The landlord does not have to prove the damage; interest normally runs from the formal notice of default, unless the contract provides otherwise.
Re-letting compensation after dissolution
When the commercial lease is dissolved through the tenant’s fault, the landlord is entitled to re-letting compensation. This compensation covers the period during which the premises stand empty until a new tenant is found.
To avoid discussions, it is best to state a fixed amount in the lease, for example three months’ rent. Without such a clause, the landlord must prove the actual damage and the duration of the vacancy, which can be very cumbersome.
Damage to the premises
If the tenant has caused damage to the leased premises, they remain liable for it. The landlord can recover this damage from the tenant.
Frequently asked questions (FAQ)
The tenant should contact the landlord immediately and propose a realistic payment plan. The sooner this happens, the smaller the risk of proceedings.
No. A payment plan is in principle always a voluntary arrangement. The landlord decides whether it is feasible and sensible. Exceptionally, a court may also grant a payment plan.
It is not legally required, but strongly recommended. It prevents misunderstandings and strengthens the landlord’s position in later proceedings.
No. A landlord cannot simply clear commercial premises themselves. Eviction of the tenant is only possible after a court ruling and service by a bailiff.
Any questions left?
Has your tenant stopped paying, and would you like assistance? Or do you have another related question? Schedule your consultation!
