When foreclosing mortgages on commercial properties in Florida, banks are often able to choose whether to keep or remove the tenants after foreclosure. The decision to keep or remove a tenant usually depends on the financial value that the tenant adds to the property. For instance, having a reputable business as a tenant with a long-term lease can significantly increase the amount for which a property will be sold at a foreclosure sale. Additionally, if a bank ends up owning the property after foreclosure, it can use the rents being paid by the tenant to offset the costs of ownership and minimize its losses. While the decision to retain a tenant or tenants post-foreclosure may prove to be beneficial for banks, all REO Officers who are managing commercial properties with tenants should be familiar with Florida’s Landlord and Tenant laws.

For banks interested in learning more about the legal rights and obligations of a commercial landlord, Sections 83.001 – 83.251, Chapter 83, Florida Statutes, are a great place to begin. These sections provide some of the basic guidelines that govern commercial tenancies, including when and under what circumstances a tenant can withhold rent due to a landlord’s failure to maintain or repair the premises, the reasons for which a tenant can be evicted, the notices that a landlord must provide before eviction, and other remedies available to a commercial landlord after a tenant lease default. One of the strongest available remedies is the ability to secure payment of past-due and future rents with a landlord’s lien on the tenant’s personal property (i.e., furniture, machines, equipment, inventory, etc.). Unlike the secured interests most bankers are familiar with, a landlord’s lien can be perfected without recording anything in the secured transaction registry or public records. In some situations, a landlord’s lien on a tenant’s personal property may even have priority over a UCC-1 that was previously recorded to secure financing for the same personal property. These remedies can be extremely useful for the recovery of rent and other damages under the lease.

Although Florida’s commercial Landlord and Tenant statutes provide a general framework for enforcing a landlord’s remedies, there are nuances and exceptions created by case law. Some of the landlord’s statutory rights and duties may be modified or waived by agreement. In addition, parties to a commercial lease can agree to many other terms that are not addressed in Chapter 83, Florida Statutes, but are governed by case law that is specific to commercial landlord and tenant relationships. REO officers who are managing commercial properties with tenants should always seek legal advice when in doubt regarding the effect of a particular lease provision or statutory section. A strong understanding of Florida’s commercial Landlord and Tenant laws will help Florida REO officers to reduce exposure to liability and know when to exercise the remedies available to a commercial landlord to maximize recovery for the bank.