Commercial Landlords and Tenants Walk a Tight Rope When Addressing Unique Issues during the COVID-19 Pandemic
|The Coronavirus pandemic has caused both commercial landlords and tenants to face difficult questions: How can tenants continue to pay rent when they are unable to open for business? How can landlords provide relief to tenants strapped for cash while also needing revenue to pay their own mortgages and expenses? These issues are certain to persist as much of the country remains socially distant and many businesses face uncertain futures.
Over the past month we’ve helped commercial landlords and tenants arrive at many creative solutions that are beneficial for both sides during these unprecedented times. Although each unique situation must be addressed on a case-by-case basis, most involve a partial or full deferral of rent. If deferred, the rent may then be amortized over an agreed period of time. In some cases, the lease term may be extended as consideration. Other options such as reducing the amount of leased space may make sense in certain scenarios. The best solution will depend on the respective needs and abilities of both landlord and tenant.
One advantageous option for both landlords and tenants is to apply for the Payroll Protection Program, a stimulus package that includes forgiveness of rent and mortgage payments. However, forgiveness is not available until the PPP loan is funded – meaning, landlords and tenants could benefit from rent deferral while the PPP application is processed, knowing the federal government will cover certain payments made within 8 weeks of the loan being funded.
Buckingham’s experienced real estate attorneys are helping guide many clients through these turbulent times. For more information please contact:
Cleveland office: David Lindner, Michael Ellis