Commercial Landlord-Tenant Relations During the COVID-19 Pandemic
Amid the health and economic crisis created by COVID-19, 房东, 物业经理, and tenants of commercial property are scrambling for information and establishing new policy. Briefings by the President and Governor change the way 业务es can be conducted with little or no advanced warning. What makes sense one day, may not be an option the next.
What has become clear, is that the COVID-19 pandemic is causing economic upheaval for 业务es. Among the hardest hit are restaurants, 健身房, 教堂, 还有美发沙龙, but many others are experiencing a complete shutdown or a sizeable loss of 业务. While the federal government is attempting to provide some economic relief to 业务es, many companies will not be able to take advantage of these limited programs. Some will be left unable to meet their financial obligations, including their lease payments.
Commercial 房东 need a comprehensive, 然而,个性化, plan for dealing with tenants whose 业务es have been closed or otherwise severely economically impacted. 在制定计划时, they should attempt to be flexible and consider the many ways to work through these difficult days. What works in one situation may not for another. As in most cases, 房东 should first analyze the strength of the tenant and the lease terms. This will provide important direction for creating a plan for moving past the COVID-19 emergency. Because each situation will be unique, a nondisclosure agreement will keep the details confidential and prevent help offered to one tenant from undermining other negotiations.
Tenants faced with drastically reduced revenue will likely ask for either 租金 abatement or 租金 deferment. 一般, the best approach is to temporarily defer all or part of the 租金, 免除滞纳金, assure the tenants that they are in no immediate danger of eviction, encourage the application for all available assistance, and establish a congenial rapport. While covering the 租金 is important, many 业务 owners are facing a multitude of problems, such as completing contracts, 留住员工, 基本生存. Temporary 租金 relief will be greatly appreciated and will not waive the landlord’s right to collect 租金 in full.
Based on the tenant’s financial stability and history of 租金 payments, this may be a good time to amend the lease. A good faith negotiation can result in everyone walking away happy. Depending on the 业务 and the lease, the landlord may request financials for the preceding year plus year-to-date in order to adequately assess both the need for relief and the ability to structure a realistic recovery plan. 一些可能性是:
- Abate 租金 for an agreed upon period (two or three months) in exchange for an extended termination date
- Defer 租金 for an agreed upon period with the deferred amount amortized over the remainder of the lease (or perhaps amortized over a pre-determined, shorter term that makes sense for the specific tenant)
- Defer 租金 for an agreed upon period with a balloon payment at a later date
- Apply all or part of a security deposit to cur租金 租金
- Modify lease terms such as CAM (common area maintenance) fees or maintenance
- Expand or reduce the leased premises
- Increase 租金 escalations in exchange for short-term 租金 reduction, deferment, or abatement
- Add an individual as an additional tenant to strengthen the lease
- 添加个人担保
Under the concept “making lemonade out of lemons,” this might be a good time to make improvements to leased premises. It’s difficult to renovate when 业务 is in full swing, but while operations are suspended or severely reduced, tenants and 房东 can partner to paint, 深层清洁, 更换地板, 做绿化, and generally spruce up the property. With tenants providing sweat equity and 房东 covering the cost of materials, the landlord-tenant relationship is strengthened and the tenants’ commitment to the leased space is reinforced. Ideally for the landlord, the cost of materials will be applied to 租金. I f that’s not an option for the tenant, the landlord could provide the materials or reimburse as agreed.
Small, commercial tenants without a CFO or executive board may appreciate direction to appropriate government programs. There are many excellent industry-specific websites, but the primary basic relief is through the Coronavirus Aid, 救援, and Economic Security Act (CARES Act) signed into law on March 27, 2020.
The CARES Act contains $376 billion in relief for American workers and small 业务es. The Small Business 政府 (SBA) website has information on loan and debt relief options for both 房东 and tenants. The same programs that benefit tenants may also benefit 房东 who are often small 业务es themselves.
The Paycheck Protection Program provides loan forgiveness for 留住员工 by temporarily expanding the traditional SBA 7(a) loan program is part of the CARES Act. If employees are kept on the payroll for eight weeks and the money is used for payroll, 租金, 抵押贷款利率, 或实用程序, 贷款将被免除. Application is made through any SBA 7(a) lender or any participating federally insured depository institution or credit union. Essentially, small 业务es make the application through their bank.
也, 根据《澳门十大正规网赌网址》, The Economic Injury Disaster Loan Emergency Advance (EIDL) provides up to $10,000 of economic relief to 业务es that are cur租金ly experiencing temporary loss of revenue due to COVID-19. Application is made through the SBA website. If approved, the loan advance will not have to be repaid.
进一步, the CARES Act gives states the option of extending unemployment compensation to workers who are ordinarily ineligible for benefits, such as independent contractors. Unemployment benefits are administered through each state’s unemployment insurance program. This program might help small 业务 owners with no employees such as hair stylists, 按摩理疗师, 总承包商.
In addition to government programs, tenants should be encouraged to look into possible coverage under their insurance policies. Insurance policies are merely contracts which provide payment to the insured in certain situations where loss has been incurred. “Interruption of 业务” clauses may or may not cover this pandemic depending on both the wording of the policy and future court decisions interpreting the language.
逆境即机遇. If handled well, both 房东 and tenants can come through these difficult days stronger. Amending or extending a lease can help tenants get through the COVID-19 crisis in the short-run leaving 房东 with valuable tenants, 更有价值的财产, 从长远来看. As in any 业务 negotiation, the goal is to find a resolution that works for both parties. Both landlord and tenant have problems that need resolving, but they also each have things to offer. A good result is more likely if a non-adversarial relationship is maintained, 派对是创新的, and focus is kept on the proverbial big picture.
Provided below are links to some helpful resources:
http://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
http://www.dol.gov/coronavirus/unemployment-insurance
凯瑟琳Byler 是澳门十大正规网赌网址 & 十大正规网赌网址 attorney focusing her practice on real estate, 业务, 监护, and estate planning matters.