As the world is learning as one; how do we deal with the impact of COVID-19 and what does the future look like as we adjust to our new normal? Is social distancing here to stay? Does society not want to go back to operating and living within close quarters? Does the travel industry see a quick bounce back or is the cruise line business changed forever? No one has the play book on how all this plays out nor what the next 2 months, 6 months and even 1 year looks like, but what we do know is we are all experiencing the effects of COVID-19 together. No country or industry is immune to the economic impact this virus has had around the world and what the new normal looks like we will again experience as one.
What options to Landlords and Tenants have during COVID-19 if rents are an issue?
Considerations for Tenants
Before taking any action, tenants are advised to review their lease agreement and seek legal advice on the implications of their potential actions, what would constitute a default of the lease, and legal options available to their landlord.
British Columbia has recently issued a ban on eviction of tenants which has created major misunderstanding amongst many business owners. It is important to understand that the ban, at this point of time, only applies to Residential Tenancies and not to Commercial Tenancies which are governed by their lease agreements and common law.
Some items that tenants need to review are as follows:
Options Available to Landlords and Tenants
After reviewing the above, a Tenant should assess their financial position and understand what best case and worst-case concessions they would require from landlord. As with landlords, tenants also need to understand that a win-win solution is required.
Tenants should contact their landlord and explain how their businesses are being affected and be prepared to provide financial data to support their claim.
How does Force Majeure impact future commercial lease agreements?
Force Majeure: unforeseeable circumstances that prevent someone from fulfilling a contract.
Does your commercial lease have this section in it, if it doesn’t; it soon could in the future. This is a phrase that is found in most commercial leases but based on the impact of COVID-19 and the inability of tenants being able to pay their rents, this section will be including and defined in most if not all commercial leases post COVID-19. For legal advice on that could impact your lease, please contact your legal council and provide them with a copy of your lease for their professional legal definition and how it applies to your lease.
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