You may be in trouble for any number of reasons. No matter your situation, you must comply with state law, local codes, and your contractual obligations as well as you can. Getting hauled into court or cited for code violations will only make a bad situation worse. If you’re nearing the end of your financial rope, call Anthony Burton so that we can discuss your case and your options.
No matter the cause, you need to make the best of a bad situation and try to turn it around or decide it’s time to move on. Selling your business or declaring bankruptcy may be more sensible approaches, depending on your situation.
Why are You in Trouble?
Before you can solve a problem, you need to find the cause.
- Is your income too low?
- Are your costs too high?
- Are you taking rent payments out of the business and using them for personal reasons or to fund another business?
- All of the above?
Consult with your bookkeeper and accountant. After getting a handle on why you’re in trouble, contact our office so we can game plan your next steps, no matter what they might be.
How Anthony Burton May Help You By Improving Your Cash Flow
There are legal actions that may improve your financial situation by increasing your income:
- Debt collection: If current or former tenants are behind in payments and you, or your bill collector, aren’t making headway, if these debts are sufficiently documented and based on legally binding obligations (like a properly worded and executed lease), taking those who are behind in payments may be a good option sense. There’s no guarantee you’ll get all you’re owed, but you may get a substantial part – which is better than nothing.
- Eviction: There are limitations on what you can do, especially if COVID impacted the tenants’ incomes, but that may not apply to all your tenants behind in rent. They may have kept their jobs during the economic downturn but, for whatever reason, aren’t paying their rent. Eviction may open up space for new tenants who will pay in full and on time. Depending on the circumstances, filing a debt collection lawsuit and seeking eviction at the same time may be warranted.
Depending on how many properties you own and the depth of your financial issues, selling some of your properties may be enough to get you back in the right direction. If you can get rid of your least profitable properties and focus on what makes you the most money, you may be able to turn the corner.
If You Need to Cut Corners, Don’t Cut the Ones That Will Get You into Legal Trouble
Unless you’re down to your proverbial last dime, your property must comply with state laws and local codes. Citations for violations could add costs at a time you can’t even afford to be in compliance. If the situation is bad enough, you may lose the ability to rent your property. If your failure to keep your property up results in injuries or deaths, you could be sued in a personal injury action and potentially face criminal charges.
You’re potentially giving clients excuses not to pay rent by failing to keep up with your lease obligations. The money they pay to fix problems you’re ignoring might be deducted from rent payments. As tenants leave, you’ll have units to fill. If their quality, and the quality of your overall property, declines, it may be difficult or impossible to charge as much rent as in the past when your financial situation was better. Thanks to social media, unhappy ex-tenants may also spread the word of problems with your property, scaring prospective tenants away, reducing the demand for your units.
What’s the End Game?
It may be time to move on and close your business. You’ll get a better price if you sell your properties before they deteriorate further and vacancies increase. If they show you lack the cash flow or resources to keep them up, a buyer may think you’re desperate for a sale. Expect that party to drive a hard bargain to take advantage of their leverage. Depending on how deep in debt you are, the real estate market may be hot enough to give you sale prices that will at least resolve your financial woes and maybe you’ll come out a little ahead.
If you’re so deep in financial trouble even selling assets won’t help, bankruptcy could be the best resolution. That could mean selling your assets and closing your business or re-organizing it to control your situation and emerge a stronger business. We don’t represent clients in bankruptcy cases, but we can refer you to highly qualified and experienced attorneys who do.
We’re Here to Help
If you’re a residential or commercial property owner experiencing severe financial challenges, Anthony Burton can help. No matter the cause or how you want to address these problems, we can take steps to make resolution easier while protecting your rights and interests.
If you have questions about addressing your economic problems, call us at (949) 244-4207 or fill out our online contact form. We can discuss your situation and what you should do next.
