In the last three weeks, millions of U.S. workers lost their jobs because of the COVID-19 outbreak. Tenants nationwide are now struggling to pay rent and landlords are seeing their revenue significantly drop. The solution to this situation–communication. “It’s essentially a one-on-one discussion or negotiation you must have with the landlord,” says Principal Jason Smolen. Smolen encourages tenants and landlords to negotiate during the coronavirus crisis.
He offers the following tips for landlords and tenants:
Tenants – Options for Lease Renegotiation
- Rent Deferral: A process where you put off the rent today to pay it back later or over the course of the lease.
- Rent Abatement: The landlord suspends rent payments, whether it’s some or all of the rent for a period of time.
- Extended Lease: In the back end, you extend the lease to add months for the months that you didn’t pay.
- Lease Termination: Negotiate your way out of the lease if you no longer need the space or cannot pay for it.
Landlords – Negotiate with Tenants
“Work with each other to do what’s right under the circumstances notwithstanding that they have this legally binding agreement between them because quite frankly the world has changed,” advises Smolen. Work out a scenario that’s beneficial to both parties to preserve that relationship in the long-run and maintain the tenant. Every situation is unique, and there are parameters as to what you can do or how much you can put off for tenants.
Talk to an Attorney
Get your attorney involved in the process because every negotiation is different. An attorney knows what the pressures are on each side of the transaction. They can help you reach an agreement professionally, but with compassion.
If you have any questions about lease renegotiations, please contact Jason Smolen at jdsmolen@smolenplevy.com.
About the Author
Jason Smolen
Jason Smolen is a founding principal of SmolenPlevy. Smolen’s knowledge of complex estate and business issues has drawn the attention of ABC News, USA Today, E! Online, Realty Times and the Bank of America Small Business Online Community. Mr. Smolen is a graduate of the City College of the City University of New York and the George Mason University School of Law. Smolen also serves as a board member of a local citizens association and recently co-authored an article titled Why You Should Think About Spousal Limited Access Trusts (SLATS).
