Office space during COVID-19 has become a tricky issue for commercial landlords and tenants. The ongoing federal and state moratoriums have strongly encouraged (and in many cases, required) workers to stay at home, and avoid using commercial offices. Coronavirus, moreover, has put many businesses out of operation.
This has resulted in many problems over office space during COVID-19, namely, whether the pandemic excuses either party from a written lease.
Overview of Commercial Leases
Compared to residential leases, commercial leases allow tenants to assume much greater responsibility for leased property. While residential property comes with detailed requirements on what is and is not allowed for housing, few requirements exist for commercial property.
Commercial leases tend to be much longer in term than residential: it is not uncommon for such tenancies to last several years, and require commercial tenants to assume all utilities, taxes, and other expenses associated with the leased property.
Under commercial leases, tenants are often asked to waive their right to a jury trial in the event that a legal dispute arises, and pay a landlord’s attorney fees if a landlord needs to use legal action against a tenant.
Options for Office Space During COVID-19
If a commercial landlord or tenant has a problem continuing a tenancy during COVID-19, the first step is to attempt to resolve the matter through negotiation. It may be possible to work out a repayment plan or deferment of any owed rent, until the pandemic passes. Such an arrangement is often to both parties’ benefit.
If such a resolution cannot be reached, the next step is to review the lease itself. Many leases have force majeure clauses, which excuse contract liability for an unforeseen circumstance. Even without such a claim, the law (in some scenarios) permits a contract defense based on impossibility of performance or impracticability.
COVID-19 remains an ongoing challenge to commercial landlords and tenants alike. If you need assistance with such a matter, contact me for a consultation.