BROKEn Promises: 3 Signs Your Tenant May Be Going Bankrupt

The bankruptcy of a tenant is disruptive and may be confusing to a landlord; however, arming yourself with knowledge of some warning signs of financial distress and an understanding of your basic rights will, along with your trusted legal advisor, help you be prepared in the unlucky event that your tenant goes bankrupt.

3 Signs of an Impending Bankruptcy

1. Rent Delinquency

If your tenant has always been diligent in paying rent, but then starts paying rent late, asking if it can make partial payments, or telling you to wait a few days before withdrawing or cashing a monthly payment, be prepared for trouble. Cash flow problems are a good indication that your tenant is on the financial skids. Rent is likely to be one of the last payments a tenant fails to make, as having premises is necessary to its continued business and its ability to pay its trade and other creditors.