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Question added to topic Legal Basics For StartupsNovember 4, 2010

As a landlord, can I terminate a commercial lease due to an unfit lessee?

One of the lessees failed a criminal background check. Can I terminate the lease with just that that person and keep it with the other qualifies lessees?
As a landlord, you have the right to carve out certain pre-conditions to leasing 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 a lease—particularly if the corporate tenant has been paying 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 a DUI eight years ago).

You may be able to work out an agreement with the tenant company whereby they voluntarily agree to leave ("surrender") the premises, so that you can take back the premises without a fuss. If thats the case, you'd want some assurances from the tenant's owners that they have sufficient voting rights and authority to make that decision without the third partner.

But all that should be clearly documented. Make sure you have able legal counsel helping you through this.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

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