Anchorage is home to approximately 40 percent of Alaska’s total population, therefore it is essentially a mecca for businesses looking to reel in a significant portion of the state’s market. As an owner of Anchorage commercial real estate property, you should see to it that you know how to screen prospective business tenants and avoid getting into pitfalls that you couldn’t readily get out of.
The first step in screening prospective tenants is to do a background search on them. Interview your prospects and ask them a series of questions about their previous landlord (if any) and what made them leave and choose to lease your establishment. You should also check if the corporation or any of its members have had previous lawsuits filed against them.
The best way to weed out a sham corporate entity is to ask for as much details as you can—this means the names, addresses, and contact information of the executives or directors, as well as the articles of organization from the state business licensing board. Be wary of tenants who can’t provide all pertinent business documents.
Chicago-based attorney Alisa Levin writes in RealEstateLawyers.com that you should also secure a personal guarantee from the principal of your corporate tenant:
Just because ACME Corporation has been in business for 20 years does not mean that the rent will be paid on time or at all! Whenever leasing to a corporation, be sure to require a personal guaranty. You wouldn’t rent your million dollar pad to an 18-year-old with no credit would you, without a parent co-signer? Well, don’t rent your precious real estate to a new company (or an old company for that matter) without a personal guaranty. That means that you need only an extra signature in the “Guarantor” signature block to make that effective. If you have to file suit at any time, you now will have the major player in court – and likely your source of recovery.
It’s also prudent to look into the prospective tenant’s business plan—after all, you wouldn’t want to lease to a business that’s in danger of going under in a few years, would you? Make sure that the tenant is succeeding in his industry, and that the industry itself is stable and valued—otherwise you might be leasing out to a non-paying hazard.
To get complete information as to the protections that you should gear up with when choosing tenants, look into hiring consultants from established companies like Graham Commercial Real Estate. Such companies can also help in other aspects of your commercial real estate business, such as providing tips on having a successful investment property in Anchorage, AK.
(Source: Avoiding Crafty Tenants – a Primer for Commercial Landlords, Realestatelawyers.com)