Saratoga.com logo
Saratoga.com logo
  • Places to Stay
  • Things To Do
  • Food & Drink
  • Events
  • Businesses
  • Travel Guides
Saratoga Business Journal
  • Home
  • New Businesses
  • Business News
  • Business Reports
  • Business Briefs
  • Business Registrations
  • Personnel Briefs
  • Contact Us
Home  »  Year-End Tax Planning  »  Business Report: Your Lease Amid COVID-19 Pandemic
Year-End Tax Planning

Business Report: Your Lease Amid COVID-19 Pandemic

Posted onNovember 12, 2020November 13, 2020
Lisa Blanchette is an associate with Bond, Schoeneck & King.

BY Jessica M. Blanchette
Commercial tenants: Remember that extensive and wholly uninteresting document entitled “lease agreement” that you scanned, signed, then shoved into a file folder and never thought of again?
Well, it’s making a comeback.
If you are one of the many businesses struggling to pay your rent due to the economic effects of the COVID-19 pandemic, your lease agreement should be one of the first resources to which you turn for guidance.
Like all contracts, commercial leases typically include the standard who, what, where, when, and why provisions of an agreement between a landlord and tenant. But they generally go beyond that as well and many leases, especially long-term ones, also contain lengthy provisions outlining the rights, obligations, and, perhaps most importantly, protections for both landlords and tenants.
One such protection that is at the forefront of discussions in the midst of the COVID-19 pandemic is the “force majeure” clause. Force majeure clauses address a variety of catastrophic events beyond the parties’ control that, if they occur, may relieve one or both parties from performing their contractual obligations.
To be effective, however, the clause must contain the specific event that a party is claiming occurred. Applied to today, whether the COVID-19 pandemic is sufficiently similar to the events listed in a lease agreement’s force majeure clause, such that performance might be excused, is completely dependent upon the particular language in the agreement and requires a close examination.
Other provisions of a lease agreement might also lend some guidance as to how parties should proceed if an unforeseen event prevents either party from fulfilling its obligations. At the very least, the lease agreement can act as a catalyst to a conversation between a tenant and a landlord about the tenant’s realistic ability to pay rent. It goes without saying that these conversations can be uncomfortable and downright stressful for both tenants and landlords.
Yet many landlords are receptive to proactive, open dialogue, and may be willing to work out a modified agreement with a tenant rather than maintain an uncompromising position in which both parties lose.
Modified agreements between a landlord and tenant can take many forms and are dependent upon the specific needs and abilities of the parties involved. Some of the more popular modifications are to: (1) reduce a tenant’s monthly rent payment by, for example, temporarily reducing or deferring interest rates or waiving late fees and penalties; (2) completely defer rent obligations for a period of time; (3) apply any security deposit to rent; and (4) extend the lease term to collect additional rent on the back end of the agreement.
It is important to note, however, that each of these options may come with unique financial consequences, such as increased interest rates in the future or additional costs or fees, and tenants should be sure that they fully understand the modified agreement before they enter into it. Moreover, any modification should be documented in writing and executed in the manner outlined in the current lease agreement.
In addition to knowing their rights and obligations under the lease agreement, tenants should also stay on top of legal developments. For example, currently in effect in New York state is a moratorium on COVID-19 related commercial evictions and foreclosures until Oct. 20.
With this moratorium, however, tenants should be careful to not confuse an inability to evict with an inability to cancel a contract. Tenants who simply stop paying rent with no prior communication with the landlord might not be at risk for immediate eviction, but most certainly are at risk for breaching the lease agreement.
This can then allow a landlord to terminate the lease agreement and eventually evict the tenant once the moratorium is lifted, even though the tenant might, at some point in the future, be able to pay the overdue rent. Again, the specific terms of the lease agreement will govern.
In approaching these difficult conversations with your landlord, preparation is key and your lease agreement is your best resource as a means by which to offer to your landlord meaningful suggestions and solutions that are aligned with your financial realities.
Confronting this issue in a proactive manner, instead of waiting for the situation to deteriorate, can save a landlord-tenant relationship and set it up for long-term future success.

Previous Article Business Report: Businesses Should Take To The Offensive
Next Article Business Report: Focus On What You Can Control
Subscribe to Our Newsletter
View the Latest Virtual Edition

Categories

  • 50-Plus
  • Banking
  • Banking / Asset Managment
  • Building Trades
  • Business Briefs
  • Business News
  • Business Registrations
  • Business Reports
  • Commercial / Residential Real Estate
  • Community Services
  • Construction
  • Construction Planning
  • Corporate Tax / Business Planning
  • Cyber / Tech
  • Dining Guide
  • Economic Development
  • Economic Outlook 2016
  • Economic Outlook 2017
  • Economic Outlook 2018
  • Economic Outlook 2019
  • Economic Outlook 2020
  • Economic Outlook 2022
  • Education/ Training/ Personal Development
  • Entrepreneurial Women
  • Entrepreneurship
  • Environment / Development
  • Financial Planning / Investments
  • Fitness / Nutrition
  • Health / Community Services
  • Health & Fitness
  • Health & Wellness
  • Healthcare
  • Holiday Guide
  • Holiday Shopping
  • Home / Energy
  • Home / Insurance
  • Home & Real Esate
  • Insurance / Employee Benefits
  • Insurance / Medical Services
  • Legal / Accounting
  • Meet The Chef
  • New Businesses
  • Non-Profit
  • Office / Computer / New Media
  • Office / HR / Employment
  • Office/ Technology/ E-Commerce
  • Outlook 2021
  • Personnel Briefs
  • Retirement Planning
  • Senior Living / Retirement
  • Summer Construction
  • Uncategorized
  • Wellness
  • Women In Business
  • Workplace / Security / Legal
  • Year-End Tax Planning

Archives

  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
Connect With Us

Follow, like and subscribe to Saratoga.com on social media

Account Sign In Submit An Event
Saratoga.com logo
  • Home
  • Places To Stay
  • Things To Do
  • Food & Drink
  • Events
  • Real Estate
  • Businesses
  • Guides
  • Contact Us
  • Blogs
  • Sweepstakes
  • Advertising
Visit Saratoga.com For Everything Saratoga
Full-Service Internet Marketing: Search Engine Optimization, Website Design and Development by Mannix Marketing, Inc.
Mannix Marketing, Inc. is headquartered near Saratoga Springs in Glens Falls, New York
Saratoga.com All Rights Reserved © 2022
Disclaimer & Privacy Policy / Terms of Use / Copyright Policies

We strive to insure accuracy on Saratoga.com however accuracy cannot be guaranteed. Information is subject to change.
Please alert us if there is any inaccurate information here.

Having trouble using this site? Accessibility is our goal, please contact or email us with site improvements.