The coronavirus (COVID-19) pandemic has affected the lives and businesses of countless people. Here in the United States, programs have been implemented to provide at least some temporary aid and assistance for homeowners and tenants who have lost their jobs and may be unable to pay their mortgages or rents at this time.
But what about landlords?
Thus far, there are no programs specifically designed to assist landlords who may be experiencing business interruptions or losses because tenants can no longer pay their rents.
So what can a landlord do when faced with defaulting tenants due to COVID-19?
Frankly, not a lot. While there are some things that landlords cannot do right now (i.e., while eviction and foreclosure moratoriums remain in place) whatever steps a landlord takes right now to mitigate the COVID impact must be a carefully weighed business decision.
That said, there are some approaches that landlords can consider to mitigate the financial impact of COVID-19.
- Negotiating with Tenants.
Whether you have residential or retail tenants, communication is vital right now. It is a good idea to reach out to your tenants and find out what their situation is. Many non-essential businesses have closed, but others have been able to keep running in a limited way.
While many people have lost their jobs, others are working from home or getting unemployment. Finding out where your tenants are at and discussing possible payment options or lease modifications like rent deferrals in exchange for better lease terms or security deposit adjustments may provide the solution you need.
- Government Loans
Both solos and small businesses can apply for government loans to help them out during this time.
One program currently available is the Paycheck Protection Program (PPP). Eligibility requirements include companies with fewer than 500 employees that were in business as of February 15, 2020. These loans are available to nonprofits, sole proprietors, independent contractors and those who are self-employed. PPP loans have to be paid back but it is possible to turn a PPP loan into a grant — an award of money that does not have to be paid back. Due to the newness of these laws and their importance, you should seek legal advice if you are interested in this.
- Carefully review all insurance policies.
Although most force majeure clauses in commercial or retail leases do not specifically reference “pandemics” as a triggering event, landlords should still carefully review (with counsel) the force majeure clauses in their leases to ascertain whether COVID-19 related events could still trigger a force majeure claim. Force majeure provisions that mention “unforeseeable events” or “events or circumstances beyond either party’s control” could potentially apply to the current situation.
Because this situation is so far-reaching and unprecedented and will continue to have a future impact on your business, it is important to review all insurance policies with your risk management expert and counsel to determine whether you may have potential coverage available for COVID-19 issues.
Real Estate Attorneys in Georgia.
For more than 30 years, the Law Offices of Mark Weinstein has focused on all aspects of real estate law and litigation. We are located in Cumming, Georgia, but we serve clients in and around Atlanta, Marietta, Roswell, Sandy Springs, Kennesaw, Forsyth County, and a number of other counties in Georgia. Call us at 770-888-7707, or contact us here, or send inquiries by e-mail to: email@example.com.