Distress is a remedy that gives a commercial landlord the right to confiscate the tenant`s property in the rented premises and sell it to pay the late rent. With a few exceptions (for example. B bankruptcy, PMSI, etc.), a lessor has priority over a tenant`s merchandise when he concludes his distress in front of a secured lender who exercises his enforcement rights under a security contract. Because of the risks associated with this potential lender`s priority, lenders will often require the lessor to waive its right to distress by renouncing the lessor. Owners will often be opposed to giving up their right to distress. Depending on the nature of the borrower`s guarantees, a lender may or may follow this path. No omission by the owner to apply a clause in the agreement is considered to be a waiver of that clause or any other clause of the agreement. The landlord`s renunciation of a clause in the agreement is not considered to be a waiver of a subsequent violation of that clause or other clause of the agreement, nor is a habit or practice likely to develop between the parties in such a way that they waive the owner`s right or the owner`s right to insist on the enforcement of all provisions of the agreement by the tenant. , or to support a right to negative dependence on the part of the tenant. The owner`s acceptance of a partial payment of the rent does not constitute a waiver of the owner`s right to the full amount owed.
First, the owner should try to submit the right to pledge to his owner instead of a simple waiver. The actual value of a second position may be debatable, but there could be some recovery and it is preferable for the owner to be a secured creditor in the event of bankruptcy. Waiver or subordination should be limited to the legal or general rights of the lessor and consensual deposit rights, such as the security interests of the UCC, but not, if applicable, to all deposit rights such as pledges. The waiver should not be used to terminate the tenant`s liability under the tenancy agreement. In determining whether a lender needs a waiver to the lessor as a condition of its financing, the lender must consider the importance of the leased space for the operation of the business.