Beyond making payroll and other employee-associated costs, one of the next biggest financial obstacles being encountered by business owners during the COVID-19 outbreak is the potential inability to pay the rent. While landlords we have spoken to since the onset of this crisis are certainly understanding of the circumstances, at the end of the day, most landlords are also running a business (i.e., the rental of property), and have their own obligations to employees and lenders that must be satisfied. As such, you can expect that any request for rent concessions will be met with a measured – but hopefully rational – response.
Here are some keys to a productive conversation with your landlord about rent help:
Any landlord response to a rent adjustment request is likely to be measured, taking into account the long-term viability of the tenant and the tenant’s payment and operational history. A landlord’s perspective on the current crisis will also play a role in their response to the request. If the landlord believes that this will be a relatively short-term crisis, she may believe that tenants generally may not require rent help. It is also important to realize that because of certain obligations to lenders or investors, some landlords may not be able to provide rent concessions (at least without third-party approval).
Most landlords are realistic entities, and will only take legal action against a tenant if they believe that will yield a better result. One would hope that, to the extent permitted, landlords adopt a long-term view and make short-term rent concessions to help ensure their tenants remain viable. This is especially true in light of that fact that, in most sectors, finding replacement tenants may be a difficult task. Your job is to convince the landlord that investing in you in the form of concessions will provide a better return than if they replace you. That being said, it is possible that your landlord (and landlords generally) will not get similar accommodation from their lenders. In such circumstances, landlords who have a history of being reasonable with their tenants might become just the next businesses looking for concessions or a bail out.
The current environment has created circumstances where deals will be made between landlords and tenants that would not previously have been considered. Because most people will usually act in a financially rational manner (even in times of crisis), in most instances, sticking with a current tenant is going to be the best bet for landlords. When approaching your landlord, be honest and respectful of their situation, and ask for a reasonable amount of relief.
©All Rights Reserved. March, 2020. DailyDAC™, LLC d/b/a/ Financial Poise™
Jeremy chairs the Corporate Group at the Sugar Law Firm (Sugar Felsenthal), a national boutique serving the affluent and the companies they own or otherwise control. He advises his clients on significant transactions and operational issues in their businesses. Described by clients as "an essential business advisor" and "a partner in the success of my…
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