Rent Acceleration Clauses

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What is a rent acceleration clause?

Do you have a rent acceleration clause in your present lease? A commercial  real estate lease acceleration clause in Texas would be a clause in which a landlord can accelerate the payment of rents when a tenant breaches a lease.  The challenge is , not all rent acceleration clauses are created equal. Furthermore,  rent acceleration clauses in Texas are often highly regulated or limited. It all depends upon the state where the leased properties are located. Some states, by law allow for a landlord to implement this upon the tenant’s default and others may simply leave it up to the parties to agree or not.

 

Rent Acceleration in TexasAcceleration clauses

The accelerated rent clause  will state that all rent becomes immediately due and payable upon the tenant’s breach. Theoretically this means if you break or breach the lease, the landlord can sue the tenant for all rent (hence rent acceleration) that is due for the remainder of the lease term that the tenant has not fulfilled.

This type of provision is unenforceable. In Texas, landlords are responsible for mitigating damages and exposure to leases with tenants. This means that if a tenant terminates the lease early, the landlord must take reasonable steps to re-lease the subject property.  The landlord is only entitled to recover  lease  payments from the tenant if the landlord attempts to re-lease the property and is unable to do so. It is impossible to determine the amount of time for the landlord to re-let the commercial property space. Therefore, a this clause can’t really be  utilized. All that can be done is the landlord can ask the tenant who has breached the lease for rent payments that are currently due versus rent acceleration.

 

 

Austin Build to Suit Projects

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Commercial Real Estate Agent

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Types of Commercial Real Estate Agents

Lets look at commercial real estate agents in Austin. To do this we should define the difference between a commercial real estate agent versus a commercial real estate broker. An agent is sponsored by an agency or brokerage firm. They are licensed to practice real estate but not licensed to be on their own or employ other agents.  For more information on an agent , you can always check with the Texas Real Estate Commission website.

On the flip side, a Commercial Real Estate Broker is defined as an individual who is licensed to practice on their own and own their own brokerage company.  This may or may not have associates or other agents employed within their organization.  There is also a phrase called a boutique brokerage firm which essentially describes a brokerage firm that is local or has regional expertise. Larger firms are brokerages that are nationally located or internationally located.  There are also commercial real estate brokers who have affiliations with other brokers in the USA giving them a pseudo presence nationally in which they share leads or referrals nationally.

Specialists versus Generalists Commercial Real Estate Brokers

There are primarily 2 types of focus that exist with commercial real estate brokers or commercial real estate agents. These come under a generalist focus or a specialist focus. Let’s start with generalists, a generalist commercial real estate agent will focus on working in several different properties. 

Generalists may do retail , industrial and office . The commercial real estate brokers who specialize will focus on one or two primary industries such as Shire Commercial. We focus on office space and warehouse space in Austin.  What is the advantage to you?  Well, you know the saying you cannot be an expert on everything, that is true.  Each type of commercial real estate transaction has some similarities and some differences. The needs of the tenant , buyer or investor will be different for each as well.

How to work with a Commercial Real Estate Brokerage

Any good , professional and reliable commercial real estate brokerage firm will typically require some type of agreement in place. I know, for some when they hear agreement it makes them shudder. It should not make you feel so, why?  For Buyers and  Tenants, a commercial real estate representation  agreement as it is called covers you and tells you how the commercial real estate broker will protect your interests. It also provides details on what their fiduciary responsibility is to you. No agreement in writing causes miscommunications and perceptions.  

At minimum, by law it is required that any client receive the document entitled “Information About Brokerage Services”. This document explains what a consumer – client should do if they are to engage with an agent from regarding commercial real estate. If this is not given to you during your first substantive call, then a law is being broken.

A good agreement will have an out for you, if you are not happy with the results, then you should be able to cancel the agreement. The commercial real estate agent or commercial real estate broker should be able to cancel the agreement as well if they find that they cannot help you.  Some deals cannot be done, it is just they way business is at times and it can be due to many factors.