Securing a Tenant's Performance Under a Commercial Lease
The obligations of a tenant to pay rent, care for the premises and obey the provisions of a lease are secured by the landlord’s ability to terminate for breach and take possession of the premises. This right of termination affords limited protection as the breaches are usually substantial before action is taken. Ensuing proceedings can be protracted. Therefore, when entering a commercial lease, it is prudent for a landlord to require the performance of a tenant’s obligations to be secured by a bond, a bank guarantee and/or where the tenant is a company, personal guarantees from its directors.