5 Considerations for Landlords During the COVID-19 Pandemic
Business closures and disruptions stemming from the COVID-19 pandemic have forced commercial real estate landlords and tenants to make tough decisions to ease the economic burden of the crisis.
Florida’s stay-at-home order has brought mandatory closures, which prompted many tenants to ask their landlords to lower their rent. Others, meanwhile, refuse to pay rent while they are unable to operate their business and generate revenue.
Yes, these are very confusing and uncertain times for landlords and tenants alike. For this reason, we prepared a list of five key considerations for landlords during the coronavirus pandemic.
- Read the Lease
The terms of the lease are going to play a pivotal role in determining how to settle any landlord-tenant dispute during the COVID-19 pandemic. Let a knowledgeable lawyer review the lease as well as related agreements to explore your options.
- Keep Loan Document Provisions in Mind
Most commercial real estate loan documents contain provisions that restrict your ability as a landlord to amend lease without lender consent. So, beware of loan document provisions related to leasing when considering your legal options.
- Review the Force Majeure Clauses
If you are a landlord facing forced closure due to Florida’s stay-at-home order or another governmental requirement, the force majeure clause may apply as long as the closure occurred beyond your control.
A tenant may be able to assert the force majeure clause in limited circumstances. Whether or not a tenant may assert the clause to stop paying rent during the coronavirus pandemic depends on the terms of the lease. However, most leases do not allow using the provision to relieve oneself of monetary obligations, including the obligation to pay rent.
If the tenant is unable to access the leased premises due to the government-ordered shutdown, he or she may be able to reduce rent or terminate the lease. Each situation and lease must be carefully reviewed to explore the landlord’s options and rights.
Note: Unless mandated by government order, landlords should refrain from limiting a tenant’s access to the leased premises. Otherwise, a tenant is more likely to stop paying rent if their landlord prohibits or interferes with the operation of their business.
- Review Other Provisions in the Lease
The stay-at-home order and other government closure may require a landlord to close their facilities, preventing the landlord’s tenants from accessing their leased premises. The mandated government orders may make it impossible for the landlord to satisfy their obligations, such as an obligation to provide 24/7 access to the premises.
Thus, even if the force majeure clause does not apply in your case, you may be able to seek protection from the concept of “impossibility of performance” or other provisions in the lease.
- Consult with an Attorney About Your Business Insurance
You may want to consult with a West Palm Beach landlord-tenant dispute attorney to review the specific terms of your business insurance policy. While the business interruption insurance may not provide coverage for pandemic-related losses, a landlord may still be able to use other types of insurance during the COVID-19 pandemic.
Contact Pike & Lustig, LLP, if you are a landlord who cannot resolve a dispute with a tenant during the coronavirus pandemic. Our West Palm Beach landlord-tenant litigation attorneys may be able to help reach a consensus. Call at 561-291-8298 to receive a consultation.