Covid-19 cases continue to stop or force us to change our personal and business lives. However, commercial landlords and tenants have multiple options available to them if tenants have been ordered to shut down their non-essential business. Commercial landlords because of Covid-19 have reduced cash flow puts increased pressure on them to pay their mortgages, utilities, and personal required to maintain and run their properties. To reduce the number of foreclosures, many lenders have agreed to reduce or suspend payments on loans for people negatively affected by Covid-19.

While this is one important step to reduce your financial risk, you should also reach out to your utility provider, contractors, additional staff and see if they would be willing to reduce or suspend payments until Covid-19 has subsided. Finally, you should attempt to pass reduced or suspended payments onto your tenants. While the lack of current income makes your situation more difficult, getting your tenants on a payment plan is a better alternative to completely losing a renter and having to fill the vacant space.

What to do if Your Tenants have been affected by Covid-19

Forgiving a portion of rent due during the pandemic or prorating the rent rate may be a viable option. However, complete forgiveness of rent owed could make your situation even worse if the current crisis continues. There are two main ways you can set up payment plans for your tenants.  

The first option is to spread unpaid rent over the remaining term of the lease. This option can be broken down even further. The first option is by having the unpaid rent split equally over the term of the lease. Secondly, you can delegate the unpaid rent to the back end of the lease. The other option is to defer the rent payments by extending the term of the lease. In this situation, you would elongate lease by the number of months where rent was not paid. Additionally, if your tenant was only able to pay half of their rent for four months, you would extend the lease term by two months. Under either scenario, securing a written amendment to the lease is required to avoid issues.

Contact Our DC Law Office for More Information

Almost every business has experienced some negative consequences because of Covid-19. As such, Antonoplos & Associates is recommending that commercial landlords do not sue for breach of leases at this time. Negotiation and compromise is the key to getting through this crisis with as little economic pain as possible. For advice or assistance regarding your individual situation, please contact us. We’ll help you and your tenant reach an acceptable compromise.

For more than 20 years, Antonoplos & Associates has practiced commercial real estate, residential real estate, and real estate disputes and litigation matters. We represent clients throughout DC, Maryland, and Virginia

For more information on commercial landlords and Covid-19, contact us at 202-803-5676. You can also directly schedule a consultation with one of our skilled attorneys.