• Derek Hermsen, Union Street Corporate Real Estate

Coronavirus and Business Interruption

With the COVID-19 impacting everyone and their businesses, as a tenant representative, I have been fielding many inquiries about my clients’ ability to mitigate revenue loss and how to cover their rent obligations if this virus impacts the region for a number of weeks. My first comment is simply that I am not a lawyer and this is not legal advice, but here are some things to investigate:



Seeking rent relief.


Most landlords do the right thing. If a tenant can demonstrate financial hardship and the inability to fulfill its rent obligations, landlords don’t want to see their tenants go into default. It is reasonable for you as a tenant to seek a period of rent abatement. It is completely negotiable, so being open and fair is essential.


Business Interruption (Income) Insurance.


· Check with your insurance provider for this coverage.

· It is common for your landlord to require this insurance per your lease.

· These funds may be available to you to cover your rent.


Force Majeure.


· Some leases have a clause which is specific to unforeseeable circumstances that prevent the tenant from fulfilling its contract obligations. Check your lease to see if you can seek some relief during a defined event (i.e. a pandemic, Act of God, government mandate, etc.).

· It is not uncommon though, for the obligation to pay “rent” to be an exclusion; especially in leases which require that the landlord be named “additional insured” in the insurance provisions. Therefore, “force majeure” language may not be too helpful, but it doesn’t hurt to check.


If you have questions about your specific situation or lease, please feel free to reach out to me to discuss. Like all of you, I have some extra time on my hands this week.


Also, if you have a different strategy or other way to help mitigate rent and lease obligations during this event, PLEASE let me know! derek@unionstreetcre.com

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