Monthly Payments

‘personally’ - at what point, would you rip down a sign for non-payment…keeping in mind, a very ‘tight’ lease,but not wanting court action, but also not wanting to pay installers to take down a sign, spend time to re-sell the space, and have installers quickly put up something new…
-it is about a balance act I find…and where is the middle ground…I guess that is the question…


Great question. I have been there thousands of times. Here’s my best answer. When someone does not pay you, first try to work it out in a friendly manner. Maybe they didn’t get the invoice (that happens). Maybe they are in a cash flow crisis but will pay you late (that happens, too). But if they won’t give you a time frame in which they will get caught up, or even worse won’t take or return your calls, then you have to move fast to mitigate the damages. Before you throw in the towel, stop by for a face to face meeting. If they won’t meet with you, then that’s the end of the movie. I have tried this and had the person pay me as a result of me stopping by. It is much harder to duck you in person.

When it is clear they are not going to pay you, or make any attempt to get you caught up, send the necessary notices to terminate the lease. At the same time, file a lawsuit in small claims court for the unpaid portion of the lease. Some judges will let you sue for the whole lease. Others make you sue for a few months, rationalizing that you should be able to find a new tenant by then. Be sure to throw in the cost of the production of the ad (if the judge will let you get away with it). Be sure to stay under the limits of a small claims court action (which is around $5,000). Only ask for damages of that amount and no more.

I once took down a motel billboard for non-payment without filing the required notices. Next thing I know, I get sued by the motel for $50,000 in damages (they claimed they lost that much in revenue by the sign being removed). It scared the heck out of me. I ended up settling the lawsuit (I paid the guy who did not pay me – pretty fair, huh?) and vowed never to do anything that stupid again. Don’t follow in my footsteps. If you do not know the correct procedure to terminate for non-poayment, consult a good attorney.

Of course, the next step is to go wild on getting that face re-sold. You know my steps (if you’ve read my book) and that would be to get that ad down as soon as you legally can, and put up your phone number, to get the ball rolling.

Some people never file suit for the unpaid amounts – they are worried about offending the advertiser. I would ask: are you going to rent to that guy again in the future? Of course not. So file the suit. You will get paid, if only a settlement amount, about 50% of the time during a recession [and about 80% of the time when the economy is decent].

Sorry you have to go through that, but everybody does. It’s just a part of the business.

Thanks Frank…and some pretty funny stuff in there about you and the motel !!

Frank, could you just wright into the contract if the payment is not recieved by a certain date that the vinyl advertisment will be removed?

If anything is said in court just whip out the signed contract.