The COVID-19 outbreak has become a public health emergency of international concern in the time of a few months. Due to the recent spread of the virus to the United States, many state and local governments are taking prophylactic measures to limit the spread of the illness. These actions include shutting down businesses unless they perform an essential function, requiring citizens to practice social distancing or shelter-in-place, and restricting dine-in options for restaurants. The financial impact this has on businesses is, put simply, substantial.
For small businesses with commercial leases this could be a death knell. This international pandemic has had a direct and unforeseen impact on businesses; however, these businesses may have options to avoid the loss associated with their commercial leases. Commercial Leases have many permutations for handling unforeseen acts of nature which may generate different obligations for either a Lessor or a Tenant business. Upon the occurrence of an unforeseen act of nature, or government action pursuant to it, if specific actions are taken, a business may be relieved from rent payment. Businesses enter a lease commercial of space for the purpose of utilizing this space in order to conduct business, whether that business be to develop, design, or manufacture new technologies or to sell goods to a customer base. Many of these businesses have had their purpose for leasing property severely frustrated directly by either the global pandemic caused by COVID-19 or by government actions restricting businesses and citizens in their activities rendering performance of primary business purposes impossible.
These material unforeseeable hinderances generated by these wide-swept natural forces and government action may provide relief from lease payments depending on the specific language of individual leases. Different categories of businesses are affected differently by these restrictions generated by the pandemic and government. The Law provides a potential remedy in the wake of unforeseeable events and the where the primary purpose of a lease is rendered impracticable, illegal, impossible, or is frustrated. The legal doctrines are governed by multiple factors used to determine how they apply to your business and its survival following acts of nature.
As a business owner you know how the COVID-19 has affected your business and livelihood but you may not know your options when assessing how it affects your commercial lease. By speaking with an experienced attorney who understands your unique position, business, and lease they may advise you through the unforeseen options to your substantial unforeseeable circumstances.