Covid 19 Lease Negotiations: Many landlords and tenants are struggling with the impact of Covid19 related closures and restrictions. These issues include loss of income, reduction in sales, reduced rent payment collections, and the need for restructuring lease terms to address today’s many unique challenges. I have developed procedures and programs for addressing these issues considering both Landlords and Tenants situations in a methodical, professional manner.

First and foremost to do this right these situations must be addressed on a case by case basis. Both Landlords and Tenants must review their lease in-depth to fully understand each other’s obligations and duties. Tenants must submit written requests outlining their individual situation, explaining how they have been affected and what they propose they need to continue to function in this climate. Landlords must respond accordingly, reminding Tenants of Landlord’s obligations to their lenders, investors, and tax obligations.

Landlords: DO NOT create a “blanket” rent relief or rent moratorium program intended to apply to all tenants in any one situation or property. This is not a wise or best practice solution to the many diverse issues presented by Covid19 impact on tenants. It is important to take on the situation on a case by case basis. This may take more time and effort but it is necessary to appropriately create terms that apply to each individual tenant’s needs. Some tenant’s businesses (banks, financial and government institutions) may not have been impacted in a negative way and no rent concessions are needed or warranted. Some businesses (drive-thru restaurants, cleaning companies, some medical providers) may actually have increased sales as a result of the Covid19 situation and again, no rent concessions are requested or warranted. In other cases (bars, restaurants, salons, call centers to name a few) Tenants may have been seriously impacted, even legally required to close, and they will require a more serious consideration for rent relief and/or renegotiation of their lease terms. It’s important to get a clear picture of how tenants are impacted, establish the amount of rents due; request additional information from the Tenant including updated financials, gross sales, business plans, and determination of payment schedules. In some cases, a Landlord must arrange to prepare formal default notices and delivery to the Tenant. Depending on the response from Tenants Landlords may proceed with collections, evictions, and or negotiations for resolution of outstanding balances and lease payments going forward. Legal counsel may be required depending on your tenant mix, business profiles, progress in negotiations level of delinquencies, and legal notice requirements.

Tenants: It’s important to understand your lease agreement and what your obligations are. Additionally get to know and understand your Landlord’s duties and responsibilities as well. Give thoughtful consideration of how your business has been impacted by the Covid19 situation, can you pay your rent and meet your other business obligations? Make a realistic Covid19 business plan and outline how you will modify your business operations, reduce expenses, and other actions to stabilize during this time and looking forward, long term solutions as well. Present this plan to your Landlord, respect their burdens as well and propose what you can do, for how long and what’s next for your business. In some cases it may require significant negotiations, legal counsel may be required and resolution may be possible.

Please contact me for additional information or to assist with your particular commercial real estate challenges at this time of Covid19.

Tony Wood, Director of Leasing and Sales, KW Commercial



916-390-1274   tony@tonywoodcommercial.com