Home | How Have Commercial Landlords and Tenants Been Compromising During COVID-19?

How Have Commercial Landlords and Tenants Been Compromising During COVID-19?

by | Sep 18, 2020

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COVID-19 has been causing commercial landlords and tenants to have different kinds of conversations lately — in many cases, both have elected to work collaboratively and make compromises due to the pandemic. 

Move-in dates were delayed and leases were significantly impacted. As more tenants became troubled with the loss of revenue and other business-related problems, many sought rent relief from their landlords.

During the most successful negotiations, commercial landlords and tenants had transparent discussions about the parties’ issues to find the best outcome for both parties in the long run. 

Here are some of the ways commercial landlords and tenants have been collaborating to reach creative solutions during COVID-19:

Delayed Lease Commencement Dates

Due to COVID-19, construction and tenant buildouts were halted, and many tenants were prevented from moving into their premises. In many cases, both parties had to compromise to reach fair agreements since government restrictions precluded tenants from physically occupying their spaces. 

In one particular case, CLG represented a tenant in a lease that was signed in mid-March prior to COVID-19 restrictions. Although the tenant’s lease commencement date was scheduled for May 1, the prior tenant could not move out of the space in mid-April as planned. CLG negotiated to delay the lease commencement to mid-May on favorable terms to the tenant.

Lease Amendments and Temporary Relief

COVID-19 had a tremendous impact on businesses and their bottom lines. As a result, there has been an increase in commercial tenants requesting to modify their existing leases and lease amendments rose dramatically. 

While the request for rent relief has become common in these unprecedented times, any discussions are contingent upon a tenant’s ability to provide evidence of financial hardship.

Deferment & Abatement Requests

Most of the restructuring discussions during COVID-19 have revolved around deferment and abatement requests requiring both landlords and tenants to have to give and take to reach an agreement. 

In one recent transaction involving a deferment, CLG represented a landlord in a case where the tenant was experiencing financial hardship due to the pandemic. After the landlord reviewed the tenant’s financials, the landlord agreed to the rent deferment subject to the tenant’s extension of the lease by one year; deferred rent paid back in equal monthly installments over a 12-month period; and the parent company of the tenant signing onto the lease as a guarantor.  

Learn More About CLG’s Commercial Real Estate Practice

Continental Law Group represents landlords, tenants, commercial stakeholders, developers, asset managers, buyers, and sellers for various commercial real estate matters throughout Massachusetts and New Hampshire. CLG has offices located in Boston, Salem, MA, and Portsmouth, NH. Call (617) 616-8210 to learn more about CLG’s commercial real estate practice and other legal services.

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