Landlord’s Checklist Before Tenants Rent Commercial Property

“Landlord’s Checklist Before Tenants Rent Commercial Property” written by Mike Marko

Are you thinking how you can execute a seamless turnover process?

Preparing the property for the new tenant while completing your responsibilities to the previous tenant is not an easy task. However, if you’re managing a commercial property, you should know how to handle this turnover process with ease.

It’s your responsibility to make the rent commercial property available for the next tenant. As much as possible, you need to avoid receiving complaints from the new tenant or conflicts arising with the previous tenant. Do you know how to do this?

If not, then this article can serve as a guide. You will learn how to do the proper turnover process as we discuss the appropriate actions that must be taken before tenants rent commercial property.

Take a look at what you need to prepare before a tenant rent commercial property.

Preparations Before a Tenant Rent Commercial Property

It’s your job to ensure the property is habitable, clean, and ready for the next tenant. The turnover process isn’t simply about removing a tenant and letting the new one moves in.

There are things you need to do to ensure the turnover process will go smoothly. Wonder how to do it? Let’s start by discussing the landlord’s checklist.

What Is A Landlord’s Checklist?

A landlord’s checklist specifies what a landlord needs to complete prior to renting the commercial property to a new tenant. This is a series of tasks to make the property ready for rental again. This list should be property specific and detail all things to be completed.

A checklist is not only needed when new tenants rent commercial property. It’s also needed if:

  • You bought or has a new rental property,
  • Your tenant lease’ expires,
  • A tenant vacates their rented space,
  • After evicting a tenant, and
  • You’re reviewing commercial properties for updates or remodels.

Property managers usually make a checklist during a turnover process. They’re doing this specifically whenever they’re inspecting the property.

Inspecting The Commercial Property

Simple wear and tear that’s not addressed by the property manager can greatly impact the tenancy, as well as the relationship between the tenant and the landlord. To keep tenants happy, develop a property review.  This will help you determine if maintenance or repairs are needed.

Inspect the property a week before the tenant moves in, to minimize complaints. When walking through your commercial property, it’s important to check its utilities. Consider adding the following to your checklist.

  • Make sure fire alarms and carbon monoxide detectors are present and working,
  • Check if all the electrical plugs to ensure that they are working,
  • Turn on all the lights and replace the ones that are not working, and
  • Test if both the heating and cooling system of the commercial property is still working properly.

Things to Do Before the New Tenant Moves In

Since you’re dealing with business tenants, it’s important to maintain your professionalism. With that being said, here are the other things you should include in your checklist.

Negotiate and Sign Lease Agreement

A signed rental agreement is a legally binding document. It includes all the terms and responsibilities of both landlord and tenant.  While negotiating this contract, both sides should discuss and address their concerns.

Allow tenants to review the contract before they sign it. Discuss and explain the terms and clauses. Make sure they agree to all areas of the lease agreement prior to signing.

You need to have a signed document before you let the new tenant moves in. This is needed, otherwise, you can’t collect rent and security deposit from the tenant.

Collect Rent and Security Deposit

Rents are determined by market demand and size of commercial space to be rented. Aside from that, payments for utilities and maintenance can sometimes be added to the base rent.

Some property managers require 2 months rent in advance along with the security deposit. The security deposit is the money that’ll be used to restore the rented property to its original state should any renovations or damages take place.

Never accept a tenant who refuses to pay the first month’s rent and the security deposit in full. This is a clear sign that they are not reliable when it comes to their financial responsibilities.

The usage of the security deposit depends on your agreement with the tenant. Keeping it after the tenancy ends depends on the terms of the lease agreement and the local law in your area.

Guarantee the Availability of the Property

Make sure there’s a vacancy on your property before accepting tenants. Also, confirm the move out date of the current tenant. Failing to guarantee an available rental space can result in legal consequences.

Set the Move-In Date

After guaranteeing the availability of the property, the next concern that should be addressed is the move in date.

The commercial property must be available on the specific date the tenant determines to move in. The move in date should be after the necessary repainting, recarpeting, and any required renovations to the property.

Repair the Property

Prior to the move in date, the vacant commercial property should meet the expectations of the new tenant. Make sure to fix even minor damages or simple wear and tear. It’s necessary to remove the alterations made from the business of the previous tenant.

Return the Security Deposit

Deduct the amount of the cost used to repair damage to the rented commercial space. Regardless of the damages, repairs, and required uses, you still need to return the remaining deposit within days of vacating the property.

Follow your state’s laws for returning the remaining amount of the previous tenant’s security deposit. Most states require the property manager to return the security deposit especially if it’s not used.

Check the rental laws in your area regarding the security deposit. This will give you an idea of how and the exact time frame the security deposit must be returned.

Repaint and Change Locks

Aside from repairing the damages, property managers must also repaint and change the locks on the property. This is a common practice to ensure the security of the new tenant.

The fresh paint eliminates bad odor and gives a newer and cleaner appearance to the rental property.

Keep in mind that changing the locks is necessary, even if the old tenant returns the keys before moving out. This is to avoid any security issues or problems of old tenants returning to the property unannounced.

Nevertheless, most states and tenants require new locks for the rented property.  

Review the Checklist

Review your checklist with the previous tenant. The move out checklist is a document agreed on by both parties.

That’s why it’s best to do an onsite review of the checklist to avoid any misunderstandings or mistakes. Ask the tenant to review and sign the checklist upon receipt as well as upon completion.

Take pictures of the property on the move in date of the tenant to show the original state of the property. The pictures taken during the move in date will be the basis of the property’s original state.

Tips for Same-Day Turnover

Tell the old tenant to move out before noon to avoid conflicts. In this way, the new tenant can move in before 5 pm or onwards. You can use the time then to do a quick cleaning and minor repairing to the property.

Hire a professional cleaning crew to do the checklist for you and help you prepare the commercial property for the new tenant.

If the checklist is not finished within the day, assure the new tenant that you will fix any additional damages in less than a week.

Final Thoughts on Landlord’s Checklist Before Tenants Rent Commercial Property

In this blog, we discussed the landlord’s checklist before a tenant rent a commercial property. Since you’re managing a commercial property, it’s best to present it in good condition. Consider making a checklist of the things you should do before a new tenant moves in.

You need to inspect the property after the previous tenant moves out of the property. This allows you to determine if the property needs major or just minor repairs. Before tenants can rent commercial property, a lease agreement must first be negotiated.

Without a signed agreement, you can’t collect rent and security deposit. Make sure that the property is available before collecting requirements to the new tenant. The move in date of the new tenant should be after the restoration process of the property.

During the turnover process, return the remaining security deposit of the previous tenant. Consider repainting and changing the locks on the commercial property. Doing this prevents unauthorized entry of the previous tenant.

If you have questions regarding how to rent commercial property out, leave them in the comments below.



Suggested Articles:
1. Guide To Creating A House Rental Contract
2. Checklist For How To Make A Living With Rental Properties
3. Guide On How To Start A Rental Property Business

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Article: Landlord’s Checklist Before Tenants Rent Commercial Property

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