The following information provides a general summary and is for informational purposes only. It is not intended to be comprehensive, nor does it constitute legal advice. Specific legal advice should always be sought before taking or refraining from taking any action.
As the COVID-19 pandemic continues to disrupt
the fitness industry across the globe, relationships between tenants and
landlords will be tested. Now that Federal, State, and County mandates are
expiring, many businesses are faced with the reality that past due rents must
be paid up. It's only a matter of time before you'll be contacted by your
landlord. It's our recommendation you make first contact and have open
communication about negotiating rents. There are no winners in this situation,
so be creative and be ready to negotiate.
Here are some viable alternatives to mitigate
the past due rent:
Reduction - You could request the
landlord reduce your rent for a portion or all of the term left on the lease.
The usual forms of rent reduction are to reduce the base rent, operating
expenses, or both.
Deferral - In this case, you would
request the landlord defer a portion of your rent, but you would need to make
arrangements to repay the rent deferred at a later time, either in a lump sum
or by increasing subsequent payments.
Abatement - If you are significantly
past due on rent payments, your landlord may agree to forgive a certain amount
of the past due rent if you remain current thereafter. Remaining current might
mean requesting a lower base rent until you get back up to speed.
Conversion - Rather than abating past
due rent, your landlord may agree to convert the past due rent into a loan
payable over time. The tenant would, however, continue to pay the current rent.
The loan is then evidenced by a promissory note that is cross-defaulted with
the lease. If possible, avoid giving any personal guarantees.
Deposit - If the landlord holds a
deposit, you could request this amount be credited against your current
obligations. However, expect your landlord to request that you fully replenish
your deposit at a later date.
For more information about the above topic,
contact Gary Hood at 925-672-4800 or email email@example.com.
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Rent Relief Requests and Other Tenant/Landlord Issues
Labels: General Business, Landlord