Cea Legal Provides Guidance for Commercial Tenants Amid COVID-19

NEW YORK, May 11, 2020 (Newswire.com) - Does the prolonged nationwide shutdown entitle restaurants and other retailers to obtain multi-month free rental concessions from landlords? Most likely no, unless an extremely broad “force majeure” clause in their commercial lease specifically includes a pandemic event. However, many tenants also cannot graciously continue to pay full rent during a period in which their revenues dropped significantly or, for some, completely.

Michele Cea, New York Real Estate Attorney and Principal at Cea Legal, weighs in with possible ways to remedy the situation. “The best solution is to reach an amicable deal with the landlord, who is often willing to work with a good tenant that diligently paid rent until February/March 2020,” he says. “If landlord and tenant are business-savvy, there are a few options that could serve both their interests, at least in the short-to-medium term.”

These options include:

·      A rent deferral –  a postponement of current payments, with the balance distributed on a monthly basis over the next few years.

·      Applying part of the security deposit to rent payments, with an obligation on the tenant to replenish the security deposit later.

If the landlord is not willing to grant concessions, the tenant might not be able to meet its obligations and the business may be forced to close. That would mean surrendering the security deposit, which is often substantial. In some instances, according to Attorney Cea, the principals of businesses breaking their leases would also be exposed to damages. However, the New York City legislature is currently discussing a law that would prohibit the enforcement of these personal liability provisions if the triggering event derived from the COVID-19 emergency.

If a tenant’s principals will not be held personally liable, the tenant will be in a much better position to negotiate with its landlord and evaluate alternative options. Landlords are also well-aware that negotiating with a current tenant will be far easier than locating a new renter during this time, especially at the same rate. Many options exist in terms of negotiation, and obtaining expert legal guidance will be essential for tenants to achieve their optimal result.

Tenants questioning their options for lease renegotiation during this time are encouraged to contact NYC Corporate and Real Estate Law Firm Cea Legal, P.C. for a free consultation. Real Estate Attorney Michele Cea and his team are committed to finding the best solution for every tenant.

Source: Cea Legal, P.C.