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Improving the management of commercial or residential rental properties

10/10/2022

Managing a commercial or residential rental property can sometimes create difficulties when it comes to ensuring a certain level of financial profitability for its owner, particularly in the case of unpaid rent.

Achieving this objective involves implementing a forward-looking strategy that means the property is vacated as quickly as possible if problems arise, so that it can be let again and steps taken to recover the unpaid rent. A strategy of this kind will be all the more effective if it is planned in advance and adjusted to meet the needs of each situation.

Depending on the circumstances, the tenant may no longer be living in the property (despite not having returned the keys) and may not have provided any information on their new address. Failing this, the property may still be occupied by a member of their family, or they may still be living in the property but not paying the rent.

Getting the tenant to vacate the premises so that the property can be re-let requires a number of actions before an eviction decision can be secured. Contentious or non-contentious proceedings will vary in duration, depending on the situation and the tenant’s position. Deciding what action to take may be dictated, for example, by the terms and conditions set out in the lease or any claim that may be raised by the tenant in return.

In other cases, getting the tenant to vacate the premises when they no longer wants to pay the rent, despite being bound by a fixed-term lease, can be a source of uncertainty for the landlord, who is deprived of a source of income and will incur costs in re-letting the property. It is therefore important to anticipate this risk before the start of the contractual relationship, by inserting adequate provisions in the lease.

Ensuring the premises can be vacated is not the only issue: the landlord must also be able to secure the payment of the rent and other sums due by the tenant as soon as the lease if formalised. This means that as soon as a problem arises and no matter whether the tenant has vacated the premises voluntarily or not, protective measures must be implemented as quickly as possible to retain the element of surprise and ultimately, prevent the tenant from putting their assets out of reach.

Monegasque law provides a range of measures for dealing with this situation. These include preventive attachment of the furnishings located in the rented property where they are of sufficient value, so that they are classed as immovables, either with prior authorisation from the President of the Court of First Instance in ex parte proceedings, or without prior authorisation, depending on the circumstances, following an order to pay. The furnishings can then be sold at auction after a final judgment against the tenant has been handed down.

Likewise, a third-party attachment of the tenant’s bank accounts is a way for the landlord to recover the sums due by tenant. This can be a particularly useful measure if the landlord has the details of the tenant’s bank account in the Principality and they are likely to hold sufficient funds.

Unlike enforcement measures, which assume the ability to obtain a writ of execution such as a final judgment against the tenant – which sometimes comes too late, after they have taken steps to put their assets out of reach – preventive and third-party attachments are ways of taking action in advance to secure the sums due.

Implementing these measures, among others available under Monegasque law, naturally entails financial costs (such as bailiff’s fees, removal and storage costs, legal fees in the case of a dispute, etc.) which should be considered before the start of the contractual relationship and any contentious proceedings, so that the appropriate actions are taken.

Finally, and without prejudice to any advances or consignment that may be obtained before the courts, securing a final judgment against the tenant will allow the landlord to have the goods subject to preventive attachment sold at auctions or to be paid on frozen funds in the case of a third-party attachment of bank accounts. Should the landlord’s debt not be recovered in full, it also provides an opportunity to pursue the attachment of any goods of sufficient value that the debtor may own, for example, in another location.

In these circumstances, it is recommended that the legal tools available are considered as soon as the lease is formalized, to ensure the effective implementation of any protective measure if needed, and, in the case of unpaid rent, to pay special attention to implementing an appropriate strategy for each situation, so that the premises are vacated as quickly as possible and to secure the payment of outstanding debts.

Authors

Portrait ofSophie Marquet
Sophie Marquet
Partner
Monaco
Portrait ofAlexia Delaunay
Alexia Delaunay
Counsel
Monaco
Sabah Belakbir