Rent Relief and Landlord-Owner Relationship

Real estate industry is taking a massive blow from the effect of COVID-19. With many businesses facing huge declines in revenue due to coronavirus, the government has instructed landlords, tenants and financiers to agree on new arrangements to provide rental relief. Because businesses are forced to close temporarily, tenants cannot produce rent, landlords cannot collect any profit and even pay his mortgage if there’s one. Undeniably, there is no winner in this situation and now providing a rent relief becomes a hot discussion. 

Some tenants argue that they should not be obligated to pay rent as this is an unexpected event, where no one is at fault. The current situation also prohibits them to perform and be able to produce any means of money to pay existing debts.  Providing rent relief might sound a loss for the business owners but has its in line benefit. If recovery from the pandemic is going to be longer than expected, engaging with tenants early gives the landlord an opportunity to structure a relatively good deal, create a more harmonious relationship, and a basis to not grant additional requests for relief if the situation continue to worsen in the coming months.  

Landlords are encouraged to assess what help and how much the tenant’s need, and utilize any available security deposits or unused rent concessions first. Establishment owners may wish to consider a number of factors before they engage in meaningful discussions for rent relief, including their own cash flow management. Granting rent relief may also affect a landlord’s ability to pursue insurance claims or governmental bailout. They should also evaluate their current stand if they have existing financial agreement, making sure it won’t lead to more complications later on. 

As both tenants and landlords need to survive, they are urged to carefully consider the options for structuring the best for their situation, and not just one benefiting from the other.