By Brian Fisher
If you are the landlord of commercial property, then the odds are good that during the Covid-19 pandemic you have been or will be requested by a tenant to permit some form of rent relief.
There are three (3) rent relief scenarios: Rent is due but the tenant not yet paid same. The tenant requests the landlord’s consent to pay future rent at a later date than is scheduled whether in a lump sum or through a series of installments (i.e., rent deferral). The tenant requests the landlord to consent to tenant not paying certain rent without consequence (i.e., rent abatement).
There are a few concepts to consider in documenting any such rent relief:
- Expressly require the tenant to pay their proportionate share of expenses and other additional rent and service and utility charges during the rent relief period.
- If the tenant is repaying rent through installments, clarify that the installments are in addition to rent otherwise due and payable for the rent period in which the installments are being paid.
- Require the tenant to pay the landlord’s attorneys’ fee. If the tenant is repaying rent through a repayment plan, the attorneys’ fees can be rolled into the amount to be repaid.
- Include a confidentiality provision so other tenants of the project are not made aware of the agreement you have reached with the particular tenant.
- Tenant’s (i) failure to pay any relieved rent on or before it is due or (ii) breach of the confidentiality obligations should be deemed an automatic event of default without further notice or demand and, upon any event of default, any unpaid portion of the deferred rent should be deemed due and payable as if rent relief was never granted to the tenant.
- Understand the applicability and tax consequences of Section 467 of the Internal Revenue Code when granting rent relief
We can help you with that.
You may contact Brian at email@example.com or 469.916.7700 x 105.
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About Brian Fisher
Brian Fisher is a Shareholder in the Firm’s Real Estate Practice.
Mr. Fisher’s extensive practice includes the representation of lenders, developers, owners and investors in all manner of real estate transactions, including sales, acquisitions, leasing and vertical development of office, industrial, retail, multi-family, and condominium products, as well as land development, including residential, mixed-use, commercial and ranch.
Brian’s practice includes a high concentration of commercial warehouse leasing and office leasing for institutional owners such as Heitman Capital Management, AEW and Northwestern Mutual Life Insurance Company.Learn more about Brian…