The pandemic is having a major impact on business finances and the greater economy. With many businesses operating with reduced hours or closing indefinitely, many commercial real estate tenants are already feeling financial strain. As a result, many tenants may not pay their rent on time. Landlords need cash flow to pay employees and vendors and to keep operating and maintaining the property. At the same time, landlords must navigate local, state and federal restrictions on traditional enforcement mechanism available to address nonpayment of rent under their lease and Florida law.

At the time of this writing, there is no federal restriction on evictions. Florida's governor issued an executive order suspending and tolling residential evictions for nonpayment until May 18. The executive order does not apply to commercial evictions. However, on March 16, the Miami-Dade Police Department suspended the enforcement of all writs of possession until further notice, and on March 18, the Florida Supreme Court followed suit and suspended the issuance of writs of possession throughout the state until April 17, which was later extended to May 29. Without being able to obtain or enforce writes of possession, landlords cannot legally repossess their property. Because this is a fluid situation, there is no way to know if these restrictions will be extended for a longer duration of time. Accordingly, landlords must monitor temporary changes in policies enacted at all levels of government in response to the pandemic.

Landlords should also be cognizant of the financial struggles that some tenants will experience and consider approaching rent collection with a certain amount of reasonableness and understanding. Major retailers and restaurant chains across the country, such as Cheesecake Factory, Staples and Urban Outfitters, have notified their landlords that they are not able to pay any rent as a result of the pandemic. Landlords are in the unenviable position of having to choose between evicting important longtime tenants or accept a waiver, reduction, or deferral of rent.

Landlords should address rent non-payment on a case-by-case basis. Not all tenants are facing financial difficulties, and some may be trying to take advantage of the current situation. Landlords should inform such tenants that they are required to abide by the terms of their lease and, if you choose to provide relief, that rent will only be addressed after the tenant has provided sufficient financial documentation showing how the tenant has been affected by the pandemic, including the disclosure of any relief they have requested and received from the government. Where the tenant is a franchisee, the financial documentation should be limited to that specific location.

Before reaching any agreement with a tenant, landlords should have an attorney review the lease and advise them of the strengths and weaknesses of the different legal options available to them. If the landlord decides that an accommodation is in its best interest, an amendment to the lease should be drafted to memorialize in writing the agreed upon terms, and such amendment should be reviewed and approved by the tenant's counsel. If the tenant elects to not have counsel review the amendment on their behalf, then make sure that you have provided the tenant with sufficient time to review the amendment, and the amendment includes language that the tenant had sufficient time and the opportunity to obtain counsel to review the amendment.

As with most landlord-tenant situations, knowledgeable legal counsel is indispensable in navigating the myriad legal issues that may arise, but in light of the pandemic, it is more important than ever to make sure that you are represented by qualified counsel.

Instant Insights /

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