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Lease Provisions to be Aware of Amid COVID-19

Dean Mueller • 4/10/2020

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As the pandemic, COVID-19, affects economic and legislative activity and government intervention persists, landlords and tenants are facing unprecedented challenges. Due to the virus’ impact, tenants may struggle to occupy space and pay rent in the upcoming months. We would like to make you aware of a few clauses that tenants may explore as possible options to withhold rent, seek abatement or terminate their lease.

We believe landlords should consider keeping meticulous records of any issues related to COVID-19 including complete or partial loss of use for tenants (noting dates, duration and cause of closure) and actual or potential exposure to COVID-19 within the building (stating cause of closure, dates of discovery, notice and closure and any remedial actions taken). Such documentation may prove helpful during discussions with tenants, and in connection with any filing of insurance or legal claims.

As tenants begin to explore the possibility of relief under their lease, you should consult with your legal and risk advisors to assess if the current lease contains provisions that may delay or excuse performance and/or payment such as force majeure, interruption of service or denial of access. In addition to rights under the lease, a tenant will most likely review their insurance policy to explore what coverages might apply.

As always, we are here to work with and for you. While negotiated rent concessions are surely on the minds of tenants, it is important to note that landlords who carry debt service on their buildings would likely need to review the terms of their loan documents, and potentially engage in conversations with their lenders. Finally, we are carefully considering the necessary shape and scope of lease terms for new deals in a post COVID-19 world. 

As we navigate through this period of uncertainty, please know that we at Cushman & Wakefield remain steadfast and ready to help you however we can. We will overcome this challenge together.

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