Prepare
Insurance coverage may provide tenants with recourse during the pandemic. An insurance carrier can quickly determine grounds for a claim. However, the insurance industry took significant steps to revise policy coverage after the SARS outbreak in 2003, so there may be no coverage for COVID-19.
In response to the pandemic, the government established programs to provide economic relief, such as the Coronavirus Aid, Relief and Economic Security – CARES Act and Paycheck Protection Plan – PPP. The latter program is sponsored by the Small Business Administration – SBA and is designed to sustain employment for businesses with fewer than 500 employees; these funds are primarily to cover payroll, lease and utility payments for a limited period. Accounting firms are taking action by helping companies apply for PPP and other economic impact programs.
Have an attorney review legal options before engaging with the landlord. An attorney will identify potential remedies contained within the lease, as well as others that might not be explicit.
Tenants should honestly evaluate their financial condition and be prepared to share this with the landlord. Model multiple scenarios that are tenable for you as the tenant, as the landlord may have limitations in permitting rent relief or be subject to mortgage covenants preventing rent abatement.
Beacon Street Realty Advisors is available to assist you. Please call Mitch Jacoby @ 978.476.1223 or connect via LinkedIn to arrange for a confidential discussion about your situation.
www.beaconsra.com