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By enabling tenants to surrender part of their space, contraction options can keep tenants viable, out of bankruptcy, and in their leases. This may be the perfect antidote to the staff reductions, stay-at-home orders, and uncertainty over future space needs created by the pandemic.
ADOPT SEVEN KEY PROTECTIONS IN YOUR LEASES FROM NOW ON.
As businesses reopen, landlords and tenants should be thoroughly preparing for the next public health crisis. One key question both sides will have to address in their future leases: To what, if any, kind of rent relief should a tenant be entitled if a new wave of COVID-19 or some other infectious disease emergency renders some or part of the property unusable for a substantial period of time?
It’s in your interests to ensure tenants maintain social distancing in the leased space.
As businesses reopen, landlords face the challenge of helping their tenants comply with social distancing requirements. Instrumental to that effort will be ensuring that tenants have the capability to track actual encounters on the leased property.
While each lease is different, COVID-19 generally doesn’t excuse tenants’ duty to pay rent. But, in times of pandemic, having the lease on your side may not count for much. The simple fact is that for many landlords, strict enforcement of lease rent obligations is not a realistic option; it might even be illegal under the emergency decrees of some jurisdictions. That’s why rent relief has become the order of the day in so many parts of the country.
We’ll look at three coronavirus scenarios and the lease clauses you can use to address them.
The coronavirus has taken the world by surprise. And that includes commercial landlords and tenants. But there’s a big difference between lack of warning and lack of preparation. And you may be more prepared than you realize. Thus, while it may be too late to incorporate coronavirus protections into your existing leases, there’s still time to salvage the situation by relying on the provisions that your leases do contain.
We’ll give you seven lease protections against liability for “contributory infringement.”
Big fashion houses and producers of luxury goods have found a new and effective way to combat counterfeiting: Rather than chase after the small-potatoes vendors that sell counterfeit goods, sue the deep-pocket landlord of the property where the sales occur. And even if landlords had no direct involvement in the illicit sales, they could end up paying millions of dollars in damages for what’s called “contributory infringement.”
Giving tenants construction allowances to make improvements to the property exposes you to legal risks. If the tenant doesn’t pay its contractors, they may try to collect the debt from you, which can include placing a mechanic’s lien on the property. True, most leases expressly ban tenants from letting their contractors place a lien on the property and stipulate that the landlord isn’t liable for the tenant’s debts to its contractors.
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