With COVID-driven litigation ongoing across the nation, close analysis of commercial lease language is now more important than ever as many questions remain unanswered. The first wave of commercial lease disputes dealt in large part with whether commercial tenants were required to pay rent while forced to close due to the pandemic and related governmental orders. Now, new disputes are arising based on the lingering impacts of the pandemic and certain key clauses like co-tenancy, sales kickouts, operating covenants, casualty clauses and force majeure provisions are likely to play a crucial role.
For example, retail leases commonly contain co-tenancy clauses that allow tenants to reduce their rent or, in some cases, terminate the lease if key tenants or a certain number of tenants are not open and operating. These provisions are front and center given the government-mandated closures, curfews and social-distancing requirements that forced businesses to significantly alter and/or reduce their operations. As with every lease, it is important to read and understand the fine print. Some questions that we have seen arise with respect to co-tenancy clauses are:
Continue Reading Commercial Lease Disputes During the Ongoing Pandemic: The Second Wave