Rent abatement and deferrals, full promissory notes and holding a security deposit are the viable options for landlords.
In this environment, office and retail landlords should probably work with tenants when they need a break with rent.
But Jeff Lerman, co-founder of Lerman Law Partners, LLP, says they shouldn’t give away the farm.
“One of the biggest mistakes is that the landlord feels like they have no choice but to give the tenant everything,” Lerman says. “But that’s not always necessary.”
When discussions start, rent abatement is one option.
“The amount of rent reduction is going to vary, depending on what kind of a commercial setting they’re in,” Lerman says. “The types of rent abatement that we’re typically talking about are base rent, which is the actual biggest component of rent. Then if you’re dealing with office or retail, you can also be talking about common area maintenance payments.”
Another question revolves around how the landlord will offer rent reductions, which Lerman says is “one of the worst concessions” to make.
“There’s a negotiation as to how long it will go, when will it be repaid and will it be repaid,” Lerman says. “Will it be paid in installments or at the end of the lease term?”
Lerman says there is also an option to convert the rent payments to a promissory note, which may be easier to enforce than a deferral on the lease …
Click here to read the full article online.
By Les Shaver | Globe St.
