Commercial Leases: Key Considerations in Enforcing a Landlord’s Rights Following a Tenant Default
Introduction
Texas gives commercial landlords a unique right to decide how they will proceed against a tenant who defaults under a commercial lease. A commercial landlord’s remedies against a violating tenant include (1) filing a forcible detainer suit against the tenant (a/k/a eviction), or (2) proceeding with a lockout. In either instance, commercial landlords must provide the proper notices to a tenant to avoid violating the Texas Property Code.
Notice of Default and Opportunity to Cure
Before any actions are taken and notices are given, the most important thing a commercial landlord can do is read the lease. Commercial leases frequently include a requirement for notice of default and cure period before a landlord may collect or proceed with any remedies afforded under the lease or in the Texas Property Code. The appropriate written notices and cure periods under a written lease must be complied with to meet conditions for actual default and breach and to ensure that the noticing party is in compliance with the lease. In addition to contractual lease requirements, applicable Texas statutory law must also be followed. Even if your lease does not provide a notice requirement, good practice is to send a notice of default to the tenant and give them an opportunity to cure.
Notice to Vacate
After providing a notice of default, Texas Property Code §24.005(a) requires that a landlord give a tenant a Notice to Vacate the premises. The Notice to Vacate must be given in writing at least 3 days prior to a landlord proceeding with the remedies afforded to them under the lease or in the Texas Property Code. Id. The notice must be posted “on the tenant’s front door stating the name and address or telephone number of the individual or company from which a new key may be obtained” if the tenant cures their default. Tex. Prop. Code §93.002(f). Even more, the Notice to Vacate must be absolute and unequivocal and must clearly state a tenant has to leave the premises. See Johnson v. Golden Triangle Corp., 404 S.W.2d 44 (Tex. Civ. App. 1966, no writ); Schecter v. Folsom, 417 S.W.2d 180 (Tex. Civ. App. 1967, no writ); Rivera v. Shafaii Invs., Ltd., No. 14-22-00599-CV, 2025 WL 626598, at *6 (Tex. App. – Houston [14th Dist.] Feb. 27, 2025, no pet.). By providing a Notice to Vacate, a landlord preserves its choice in how they would like to proceed with collection remedies against a tenant.
*It is important to note that if a commercial landlord decides to move forward with a lockout, they may only change the door locks of a tenant who is delinquent in paying at least part of the rent, and such remedy is not available for other defaults. See Tex. Prop. Code § 93.002(c).
How do I Calculate my Damages?
When a commercial tenant breaches a lease in Texas, commercial landlords have four common law options to recover rent damages. These options are:
The landlord can maintain the lease and sue for rent as it becomes due.
The landlord can treat the breach as an anticipatory repudiation, repossess, and sue for the present value of future rentals reduced by the reasonable cash market value of the property for the remainder of the lease term.
The landlord can treat the breach as anticipatory, repossess, release the property, and sue the tenant for the difference between the contractual rent and the amount received from the new tenant.
The landlord can declare the lease forfeited (if the lease so provides) and relieve the tenant of liability for future rent.
In deciding how a commercial landlord wants to proceed against a violating tenant, it is important to note that if the landlord terminates the lease or declares the lease forfeited, the tenant’s liability for future rent may be cut off, reducing the landlord’s future damages claim under the lease, which may have significant time remaining on the term at the point of the tenant’s default. See Austin Hill Country Realty, Inc., 948 S.W.2d at 300. One option to protect the commercial landlord’s claim to future rent under the lease is to have the commercial landlord elect to repossess the leased premises, terminating the tenant’s right of possession of the leased premises, but not terminate the lease. See id.
Failure to Provide Proper Notices
Failure to provide the required statutory notice and/or otherwise improperly locking a tenant out of leased premises may result in procedural wrangling and increased costs for a landlord, and it may open a procedural avenue for a tenant to regain possession of the leased premises. Pursuant to the Texas Property Code, if a landlord fails to post the statutorily required notice and/or wrongfully locks a commercial tenant out of the leased premises (i.e., lockout when rent had been paid), a tenant may:
(1) sue the landlord through a suit for forcible entry, allowing them to “recover possession of the premises;
(2) terminate the lease; and/or
(3) recover from the landlord an amount equal to the sum of the tenant’s actual damages, one month’s rent or $500, whichever is greater, reasonable attorney’s fees, and court costs, less any delinquent rents or other sums for which the tenant is liable to the landlord.”
See Tex. Prop. Code § 24.001(a)–(b); See also Tex. Prop. Code § 93.002(g)
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By: Paige Quick