Considerations for Commercial Landlords during COVID-19

Chances are even a well-worded force majeure clause in most commercial leases did not anticipate the scope of the current viral pandemic and resulting “stay-at-home” orders and business closures. Commercial Landlord obligations are defined by the lease contract. Often tenants are responsible for their own cleaning and maintenance, and the landlords obligations are limited. For landlords who provide cleaning, security, and other maintenance services there is an obligation that they continue to provide those services.

While many properties will not be in use during the shutdown, there is still the off chance that someone may need to use a facility. Routine cleaning and sanitization should still be practiced in order to comply with Occupational Health and Safety Act standards, hinder the possible spread of COVID-19 and protect the obligor from liability. Any contaminated surface may expose multiple people to the virus, and you should have a procedure in place regarding cleaning and sanitation of any facilities that may be in use. Landlords should proactively communicate this plan to your tenants during these complicated times.

Some commercial tenants may struggle to meet their rent obligations in the face of closures. Conduct risk analysis and anticipate supply chain interruptions. Work with your tenants and your lender or mortgage holder proactively to ensure you all can get through these trying times. Landlords may be asked to amend their rental agreements  or to waive some covenants or representations in the agreement, such as a default or acceleration provision, to help tenants stay solvent. These requests will need careful evaluation and can raise additional challenges for the landlord.

No question that COVID-19 has turned our world upside-down. In the midst of the struggle, the attorneys at Kendrick Law Group are available to help navigate your real estate or business questions. Contact us today for a complementary consultation.

Co-written by Spenser Nampon, law clerk

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