It’s no secret that the business world was upended by government shutdowns and restrictions caused by the COVID-19 public health emergency. One problem involved companies that lease their premises. How could nonessential businesses closed by government order going to pay those commercial leases? Are there any ways to avoid paying commercial leases when your business is unable to operate through no fault of its own?
The first place business owners should look for answers is their commercial lease. And a Florida business lawyer can help.
Common Provisions in Commercial Leases
Typically, leases contain certain terms, including:
- Names of the lessor(s) and lessee(s);
- Details about the property being leased;
- The amount of rent, and when it will be paid;
- Security deposits and other upfront fees;
- Renewal options;
- Default conditions;
- Termination of the lease;
- Use of premises;
- Insurance requirements;
- Common area maintenance;
- Other services included with the lease, utilities, and maintenance, for example;
- Leasehold and tenant improvements;
- Sub-leasing restrictions.
Most of these provisions relate to the continued operation of your business. However, several contain language that could be used to defer payments, extend payments, terminate the lease, or find other ways to resolve issues with your commercial landlord.
Terms that Might Help You in Difficult Situations like Government Shutdowns
Some provisions in commercial leases might help when unusual circumstances or emergencies occur. For example:
Force majeure. The language contained in this provision frees both parties if an extraordinary event – one that is “unforeseeable and unavoidable” – prevents one or both parties from performing their obligations. This type of event is often referred to as an Act of God.
Impossibility. One party may excuse its failure to perform its obligations under a contract because an unforeseen event makes performance impossible.
Some parties may negotiate other clauses to cover unforeseen events before signing commercial leases. As with any legal document, we strongly encourage you to have your business lawyer review the lease before you sign it.
Answering the Question: Do Business Owners Have to Pay Commercial Leases During Government Shutdowns?
In most situations, the answer is “yes.” But that depends on several factors, including:
- Your landlord-tenant relationship. Do you and your landlord get along well? You might just be able to work out an acceptable solution.
- The terms of your commercial lease. Are there any provisions that allow you to defer payments?
- Government assistance. Are there any government programs to help commercial lessees defer rent or avoid eviction? During this public health emergency, eviction moratoriums generally were only given to residential renters.
If you cannot pay your commercial rent, consider the following options:
- Negotiate lease modifications,
- Ask your landlord for rent abatement or rent deferral,
- Discuss ways to terminate the commercial lease so you can both move on.
Renegotiating existing commercial leases can be difficult. However, government shutdowns and public health emergencies affect everyone, even your landlord.
Call to Discuss Your Commercial Leases with an Experienced Business Lawyer
We have dealt with many commercial lease situations over the years, from negotiations to termination. Lease terminology is not always easy to understand, especially when you consider the long-lasting effects of not reading the fine print.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.