In the midst of the pandemic, what should landlords and tenants do? Scott Marcus from Becker Lawyers explains what to do.
In the midst of the pandemic, what should landlords and tenants do? Meaning, so, for example, a commercial shopping center, the tenant might say I want to operate under a different business or I can’t pay my rent or what do I do in the midst of a government shutdown.
The first thing we we need to understand and taking a step back is we talk in terms of tenants being affected by a pandemic. And because tenants are perceived as the little guy and for the most part, they are it, but it is important to remember that the landlord has obligations as well. Landlords got a mortgage typically to pay they’ve got investors or various shareholders to answer to maintenance obligations, and if the rent is not coming in those obligations or the landlord’s ability to meet those obligations that might fall short. So, I was reading an article by Barry Wolf who is one of the landlord tenant gurus in our in our industry in South Florida. And it was a great little piece because he indicated that this is a very good time for a landlord to possibly renegotiate some lease terms. So if a tenant comes to a landlord and says, I need some, I need to defer my rent. I’m not going to be able to make May’s rent, June’s rent, the landlord can say, Okay, here’s what we’re going to do. We’re going to take the rent that you would have paid for May and June, we’re going to extend the lease term. Maybe instead of those two months, we’ll extend your term another year, and maybe the landlord would use that opportunity to say that they wish they had done certain things at the outset of the lease. Now is a good time for them to contract for them, maybe they want to convert the lease from a double net lease to a triple net lease, maybe they want to play some other obligation on the tenant that wasn’t already on the tenant. Maybe they want to require financials of the guarantors updated financials. Maybe they want to request for financial information on the business, which maybe they didn’t have a right to do in the preliminary lease.