Tenant Creditworthiness...A Complicated Discussion
Landlords and brokers have been forever locked in a battle over the amount and timing of landlord paid compensation, when landlords are unsure of the quality and stability of particular tenants. Landlords contend that because brokers bring tenants to landlords, that those brokers should be responsible for their tenants' creditworthiness and should participate in the credit and other risks borne by landlords.
I've written a lot on this subject. Landlords are in the risk management business. Commercial real estate brokers are in the fee for service business, and are therefore not in the business of accepting the type or quantities of risks that landlords accept. Accordingly, this matter is more appropriately one to be had between landlord and tenant.
The reality is that commercial tenants are responsible for their own creditworthiness, good, bad, or otherwise. And, while landlords are in the business of bearing acceptable levels of risk, neither landlords or brokers should bear unnecessary or unreasonable amounts of risk on a tenant's behalf.
In assessing the financial wherewithal of commercial tenants, landlords will consider numerous factors, including a tenant's:
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