April 2, 2020

April 2, 2020: How are Commercial Leases Affected by the COVID-19 Crisis?

The COVID-19 crisis is impacting businesses across the country.  Understanding the rights and obligations of the parties during these times of uncertainty is important.  One of the biggest business expenses can be lease obligations. In addition to looking to the rapidly evolving legislation for guidance on rent/lease payments and status of evictions including Governor Newsom’s Executive Order N-28-20 (3.16.20-Executive-Order), it is critical to understand the terms of the commercial rental/lease agreement. Commercial leases are typically comprehensive; however, they probably do not specifically address pandemics like COVID-19 which our country is currently battling. Nonetheless, there may be provisions of leases that are triggered if a business can no longer operate.  Here are provisions which may be applicable.  Force Majeure Clauses (“Superior Force”): a force majeure clause may excuse performance of the contract if certain events take place. This clause, if included, may cover situations where there is a required government shut down. However, the clause may also specifically exclude rental/lease payments. Rental Abatement: there may be a clause that permits rent abatement if the landlord cannot deliver required services or interferes with access to the premises. This provision, if included, may be applicable if the building is closed. AMC is available to assist you and your business during these challenging times AMC is available to assist you and your business during these challenging times.