Commercial Landlords – Practical Issues to Consider in Uncertain Times
With our communities in the midst of the current COVID-19 pandemic and related business closures, commercial landlords and tenants find themselves in uncertain and difficult times. Although commercial tenancies are not addressed in Governor Desantis’ April 2nd order suspending evictions for the next 45 days, the Florida Supreme Court has halted the issuance of writs of possession through April 17th. As practical matter during these challenging times, an eviction for non-payment of rent of an otherwise performing tenant may not be the commercial landlord’s best long-term option. Whatever rights a landlord chooses to exercise, it is especially important for commercial landlords to keep in mind some of the following:
Tenant’s Use of the Leased Premises.
For those landlords with tenants that are open and operating, does that tenant’s permitted use under its lease qualify it to remain open as an “essential service” under Governor Desantis’ safer-at-home order in effect through April 30th? If not, a tenant’s unlawful use of the leased premises could subject its landlord to potential liability.
Payment of Rent.
In the event a tenant communicates its intention to stop paying rent, it is important for a landlord to respond in writing should it wish to challenge that non-payment. Failure to promptly do so could expose the landlord to future waiver or estoppel arguments from its tenant when landlord later attempts to recover those rent payments. In the event the parties are able to reach an agreement regarding the payment of rent (for example, rent deferment or rent abatement), it is important the parties formally adopt a lease amendment reflecting their agreement, to set clear, enforceable expectations moving forward.
Provision of Services.
If a landlord has suspended provision of certain services required by it under the lease due to COVID-19, it’s important to clearly communicate those suspensions and the reasons for the same in writing to affected tenants. Failure to clearly communicate and justify any such suspension of service could expose a landlord to potential liability, including a tenant’s claim for excused non-performance under its lease.
Communication with Tenant.
As the basic examples above show, clear communication to tenants, including status of the leased premises (e.g. open or closed), expectations regarding payment of rent, and any suspension of landlord-provided services, is critical. Those communications should be documented and archived, to keep a clear record in the event a dispute arises in the future. Finally, it is important that the parties are communicating via the channels required by the notice provisions of the lease – if not possible in the midst of the current crises, a landlord should confirm and clarify alternate communication avenues in writing with its tenant.
Adam Cobb is a board-certified real estate attorney, available to help you through any commercial leasing or other real estate issues you may be facing. He can be reached at firstname.lastname@example.org or 850.361.4865.