An Approach for Commercial Landlords

As Covid-19 wrecks havoc upon our personal and business lives, commercial landlords and tenants have options available to them where tenants have been ordered to shut non-essential businesses. While landlords’ reduced cash flow creates pressure on them to keep their obligations to lenders current and to properly maintain their properties, they should be communicating with their tenants regarding plans for making up rent payments which tenants of closed businesses cannot make.

While rent forgiveness during the pendency of closure orders is one option, rent deferral should also be on the table. This can take two forms–either spread unpaid rent over the remaining term of the lease either apportioned equally or delegated to the back end of the lease (which allows some time for recovery before facing a rent increase), or defer the rent payments by extending the term of the lease by the number of months where rent hasn’t been paid. Under either scenario, a written amendment to the lease is required. Landlords might also consider deferring base rent while requiring the tenants to keep current on common area maintenance charges.

Suits for breach of leases due to closures are not the answer at this time. Courts are encountering substantial delays in the processing of civil suits and evictions do not assist economic recovery. Negotiation and compromise is the key to getting through this crisis. For assistance, please contact us and we’ll help you reach a workable solution.

For nearly 40 years, Attorney Lester Berman has practiced in the areas of real estate and litigation matters representing clients throughout the state of Nevada.

Drizin Law is providing this information for educational purposes only. It should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. This information is based on general principles of Nevada law at the time it was created and you should be aware laws frequently change. Moreover, the laws affecting you may differ depending on the circumstances. You should consult with a qualified attorney in your own state or jurisdiction concerning your particular situation. Review of this information does not create an attorney-client relationship.