Acquiring a tenant can be an expensive proposition because
- The commercial space may have sat vacant for some time
- A tenant allowance or free rent may be offerred to lease the space.
- Cost of landlord’s work
- Real estate commissions in most cases
If you are a bakery tenant looking to move or retire, talk to your landlord before your lease expires and ask for your deposit to be returned in its entirety as soon as you vacate the premises. For a timeline, we recommend that you ask your property manager about the landlord’s process for refunding deposits three to four months before your lease expires. Ask these questions:
- Does your landlord require a letter or an invoice?
- On the last day of the lease, will there be an exit viewing and walk-through of the premises to ensure there is no damage?
- What should I do to ensure the full refund of my deposit? Do I need to surrender the keys or have the carpets professionally cleaned?
- You have damaged the premises.
- You didn’t remove your leasehold improvements.
- You have removed leasehold improvements that the landlord wanted you to leave behind.
- You owe Common Area Maintenance (CAM) charges from that year.
- You did leasehold improvements to the premises without landlord consent or knowledge.
- You have subletted or assigned the lease agreement without landlord consent.
- You didn’t remove your building signage.
- You didn’t do any requested repairs.
If your landlord acknowledges that he has your deposit, your next step will be to check your lease agreement. This may state the amount of time that the landlord has to refund your deposit. If this is not mentioned, you can ask for a refund of your deposit within 10 days of your invoice to the landlord.
Following your invoicing the landlord (do so in writing to create a paper trail), call the landlord’s accounting department and ask how your deposit refund will be handled. You may likely hear one of the following two responses:
- Your deposit was applied to one of the previously-stated points and you’ll receive a statement of account (meaning that you may still owe money to the landlord).
- The landlord has a cash flow problem and can’t return your deposit yet (yes, this does happen – the landlord is broke).
- If the landlord’s reason is poor cash flow, you may want to obtain a legally enforceable payment plan in writing from the landlord. Getting back your money over a period of time is better than getting back no money at all.
- Lawyer up: This process, however, could be long, drawn-out, and expensive if the case eventually goes to court.
- File a small claim action against the landlord (depending on jurisdiction).
- Even if you do not pay a deposit up front when you sign your initial lease, the landlord may try to add a deposit clause to your lease renewal.
- If you do pay a security deposit, the landlord may try to keep the deposit for a longer period as part of your renewal.
- If your rent increases with the lease renewal, the landlord may also ask for an additional deposit – arguing that your deposit was based on your monthly rent … as this has now increased, so should the amount of your deposit increase as well.