Landlord/tenant leases in a post-COVID world
In a post-COVID world, retail leases will need to be modified to include the possibility of a pandemic and the mandated closing of tenant businesses. For the benefit of all, adjustments to the force majeure and insurance provisions, use of common areas, common area caps, alterations and regulations, should be updated to reflect the post pandemic market.
Currently, most leases don’t cover social distancing usage. Landlords should make sure that the lease language is broad enough for them to respond to pandemics and similar emergencies. Specifics would include use of common areas, installing items to improve health and safety conditions, and making necessary changes to comply with CDC, state and local authorities.
Common areas, such as sidewalks, may be needed for customer lines, and exterior spaces for dining and retail space to accommodate distancing guidelines.
Landlords may condition such use upon tenant fulfilling certain prerequisites, such as giving the landlord prior written notice of such intent, the expected duration, peak times, and specific area to be used, clean up of the areas used.
Increase caps typically do not apply to uncontrollable costs. Post pandemic “uncontrollable” costs would refer to those associated with a pandemic and the related health or safety measures the landlord takes. Installation of hand sanitizing stations, upgrades to automatic doors, hiring more cleaning personnel, and steps to make sure guests comply with social distancing requirements, should be deemed uncontrollable and not be subject to any cap.
There are a number of strategies for landlords to consider in revising their landlord/tenant leases. For a review of your specific circumstances and contract modifications, contact Derek Usman for advice on landlord/tenant matters. We’re all in this together, and we have to adjust to social and economic considerations moving forward in order for us all to thrive.