We had a meeting today because the tenant of the property we are managing will move out at the end of the month. This is an Okonomiyaki restaurant that has been operating for over 40 years. An elderly lady was operating by herself, but the restaurant was open from midnight until 5:00 and 6:00. It's a real Shin'ya Shokudō, known in English as Midnight Diner.
At the beginning of this year, she was a little sick and had to take a break. Then the coronavirus attacked there, and due to the self-restraint of going out and the request of self-restraint of business, it became impossible to foresee the future, then she decided to shut down her business.
This time, with the cancellation of the lease agreement, the procedure will basically follow the terms of the contract and the delivery conditions at the time of cancellation. Since it has been operating for over 40 years, neither the current owner nor the management company can understand the initial state. The points to keep in mind this time were the following.
1. 2 months notice of cancellation
2. When the lessee hands over the property, the lessor refunds the deposit
3. The lessee shall make a skeleton at his/her own expense and hand it over to the lessor.
When we were first consulted about cancellation, we followed the prescribed procedure and received a written notice of cancellation and the tenant's signature. We were notified of the cancellation by phone, but it is necessary to make sure to put it in writing, otherwise it will be said or unsaid afterwards.
The lease agreement this time was an agreement using the system called Guarantee Money and Non-refundable Restoration Fee. Therefore, we will calculate the security deposit to be refunded according to the number of years of the contract and refund it after receiving the delivery of the property.
The most difficult part of the process is the passing the property by the skeleton state. The condition of the skeleton is often the case when renting a property for commercial use, meaning that everything will be removed.
The removal of fixtures, walls, floors, ceilings, etc. installed by each tenant until the building's structure can be seen is called the handing over of a skeleton. Therefore, we had a meeting today with the lessee and the construction company, and decided the scheduled construction date and the confirmation date of the progress.
After all, it is not possible to confirm how far the skeleton can be made without removing the stuff, so it is necessary to confirm in the middle. Possibly, it may be sharing the block fence with the next store, so ask them to return to the skeleton state while watching the progress.
The above is today's meeting and the procedure for cancellation. As a management company, we will need to confirm that the building has been vacated, and prepare for repairs, such as recruiting new tenants and waterproofing the building so that it can be used by the next tenant. Since this is an earning property, we will be making detailed adjustments to obtain rental income as soon as possible, at what rent and under what conditions, while considering the cost effectiveness of the property.
Arrows International Realty Corp.