COVID-19 has created a lot of uncertainty for commercial landlords and tenants.
We recommend you review your lease carefully.
- Is there a force majeure clause which contemplates a pandemic, epidemic or impossibility of carrying out the terms of the contract?
- Are there termination provisions which will allow the lease to be terminated in this situation?
- Are there terms within the lease which may mean that the contract is now frustrated?
If there isn’t a remedy within the lease agreement itself, there are other avenues to explore such as appealing to the landlord for a rent reduction.
Many landlords and tenants are modifying their leases to provide for reduced rent, which is then paid in installments over the remainder of the term of the lease.
If the parties are unable to come to an agreement to modify the payment provisions of the lease during this time, then a review will need to be focused on the default provisions of the lease.
Consideration also needs to be made as to if any individuals have indemnified the lease personally as their assets may be at risk if the landlord decides to enforce their indemnity.