Rent Relief PrimerRent Relief for Tenants during COVID-19 pandemic
Rent Relief for Tenants | Possible?
Before we get started on some tips and information regarding rent relief, understand this is not legal advice. For legal advice regarding your lease, please contact a commercial real estate attorney. As everyone knows we are in the midst of shutdowns until April 13th in Austin **NOW EXTENDED TILL MAY 1st**. For now, that is all we know. Could it go longer? Yes, possibly and what if it does? What are your options as tenants?
Keep in mind a lease is a relationship. This relationship is between you and your landlord.
Perceptions and Rent Relief
There are 2 distinct perceptions in any lease. One is yours as a tenant the others is the landlords. Let’s go thru each of these so we are clear on expectations.
- Want Cash flow
- If you are a good tenant, meaning you pay on time they prefer not to lose you
- If a business leaves their space, who is there to relet it quickly?
- Prefer a detailed explanation on your pain and what is going on?
- They typically do not want to evict you unless you are not a good tenant.
- Want their business to continue
- Require some type of help if their revenues are lower due to the COVID-19 situation
- Would be happier with a modification rather than a default on their lease
Shire Commercial can help you with negotiations depending on your situation. Here are some key elements that you should utilize. Keep the lease and rental modification “flexbile” . Be prepared to navigate thru a longer period of shutdown passed April 13th 2020.
When your rental relief is approved, do not go back to the Landlord and ask for more. Take your time and be smart up front. A Landlord may ask for your financials if there is not alot of good history. Have financials prepared to be delivered if asked for them.
If you are a “Retail” type of business – you can consider percentage rent. This can be a temporary situation to kick back to your original rent schedule.
Contact your landlord “early” not later
- Prepare a detailed letter of what your situation is
- Parking? If you have an office space, are you using all of the parking?
- Security deposit- can they use this towards your next month’s rent?
- If your security deposit is used, you will have to replenish it- when?
- Ask for rent reduction(s)- detail for how long and how much?
- You should expect to “pay back” what you have been granted
- Don’t set yourself up for going to the “well” too many times
- Don’t expect your insurance to cover this type of event for you.
- A Lease modification should be one page
- If your lease is expiring soon (3-6 mos), contact Shire Commercial for renewal options now.
For tenants that have a 90-120 day expiration on their lease coming, there is re-negotiation. Depending on your situation and whether you want to stay or not? Contact Shire Commercial for help , we will work with you to understand your situation completely first. First Quarter Warehouse News for 2020.