In an article published on May 1, 2020 in Chain Store Age, Marni Ahram discusses how tenants and landlords can work together throughout the coronavirus pandemic to modify lease and loan obligations to enable tenants to survive and landlords to ensure long-term viability.
“Leases are typically landlord-friendly and rarely contain force majeure protections that enable a tenant to offset its financial obligations. Some tenants are attempting to use the narrow and fact-dependent common law doctrine of “frustration of purpose” to terminate their leases, requiring either that COVID-19 was such an unforeseen event that it rendered the lease impossible to perform or that laws passed as a result of COVID-19 have made performance of a lease illegal,” Ahram explains.
Alternatively, tenants and landlords would be more effectively served by shifting rent obligations to be based on percentage of sales and addressing reduced customer sale opportunities, expanding lease permitted uses and changing opening-hour requirements.
“As soon as these space and fit-out needs are predictable with any certainty, the parties should brainstorm how to most efficiently make these modifications to support commercial growth, and put pen to paper to clearly document the revised or new terms,” Ahram concludes.
For the full article, you may click here.