A Primer on Lease Agreements for Small Businesses
The current COVID-19 crisis has caused a dramatic upheaval in commercial leasing. As government shelter-in-place order shut down large sectors of the economy, the inability to operate business as usual directly impacts the tenant’s ability to pay rent across the country. Most leases contain “force majeure” clauses which are triggered by a natural disaster or an “Act of God.” However, these clauses are not necessarily applicable in the COVID-19 pandemic, and do not excuse a tenant’s obligation to pay rent.
If a tenant finds itself unable to pay rent, a better solution would be to amicably communicate about the issues and avoid dispute over the lease terms. This can mean the landlord and tenant negotiating a payment plan that would either reduce rent, defer payment until a later date, or suspend rent until business starts up again. Landlords likely want to keep a good tenant and will try to arrange a plan to keep them long term. See Section III for tips on working through a landlord-tenant dispute.