FAQ
Why should a landlord ask for both personal and business credit reports, even for a corporation?
Personal guarantees are common in commercial leases, especially for smaller businesses or new tenants. Landlords request both reports to assess the owner’s financial responsibility alongside the company’s creditworthiness. A strong personal credit score can offset a weaker business history, while a poor personal score may outweigh even solid business finances. This dual check helps mitigate risks like default, especially if the lease includes personal liability clauses.
Can we include a clause requiring tenants to notify us of any changes to their business structure during the lease term?
Yes, you can add a clause requiring tenants to disclose changes like ownership transfers, mergers, or bankruptcy filings within a set timeframe (e.g., 30 days). This protects landlords from unexpected liabilities or lease assignment complications. However, consult a local attorney to ensure compliance with state laws, as some jurisdictions have specific notice requirements for commercial tenants. This clause is often paired with a right to inspect financial statements upon such changes.
What details should we ask for in the ‘business references’ section to avoid generic responses?
Request specific details like the duration of the past landlord/vendor relationship, payment history (e.g., ‘never late’ or ‘one late payment in 5 years’), and whether the reference is willing to confirm the tenant’s reliability over the phone. Avoid vague terms like ‘excellent tenant’—ask for examples, such as ‘resolved lease disputes professionally’ or ‘maintained the property per agreements.’ This helps separate reliable references from cursory endorsements.
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