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Commercial Landlords Face Challenges Caused by the Coronavirus

Posted on in Real Estate

Lake County commercial real estate attorneysBy now, virtually every person in the United States has been affected in at least some way by the outbreak of the novel coronavirus known as COVID-19. Here in Illinois, businesses that are considered non-essential have been closed for several weeks, and millions of people are staying home in compliance with the “shelter-in-place” order issued by Governor J.B. Pritzker last week.

There is no question that this public health crisis is already having a significant financial effect on the businesses and business owners who were forced to close. However, there is a specific group of people who have seemingly gone overlooked in news stories and reports. Many commercial landlords—or those who lease space to businesses—are facing a possible economic disaster of their own as they try to figure out their options during this unprecedented series of events.

Federal Foreclosure and Eviction Freeze Only Affects Residential Properties

On March 21, the federal government announced that it was instituting a freeze on all foreclosure and eviction proceedings. A number of federal agencies were affected by the announcement, but all of them are agencies focused on residential matters. The freeze on evictions and foreclosures was obviously good news for those who have not been able to work since the outbreak reached pandemic levels, but the government’s announcement did not directly affect commercial property owners.

In the wake of the freeze, many banks and financial institutions have indicated that they were creating programs and making options available to help struggling homeowners avoid falling behind on their mortgage loans. Again, however, such measures have largely been focused on residential properties.

Reach Out to Your Lessees

If you own commercial property and lease it out to business owners, there is a good chance that many, if not all, of your tenants have been shut down as non-essential businesses. Before the situation gets any worse, it is a good idea to contact your lessees and find out they have been able to continue operations on a remote or “work-from-home” basis. If a particular business has been able to operate in the midst of the shelter-in-place order, your tenant may be able to continue making rental payments without a problem.

On the other hand, if your tenants have been unable to continue operations, you might consider coming up with some creative solutions. First and foremost, it is important for you to be compassionate and understanding of the challenges that your tenants are facing, even if you are struggling as well.

Now is not the time for pressuring people to make payments they cannot afford. Instead, think about offering reasonable modifications to the lease agreement that benefit both sides. Listen to your tenants and try to reach an agreement that allows you to fulfill your obligations while respecting the needs of your lessees.

A Lake County Lease Modification Lawyer Can Help

People across the country are facing unprecedented challenges caused by the COVID-19 outbreak, and we understand that being a commercial landlord is not easy right now. At Newland & Newland, L.L.P., our experienced Libertyville real estate attorneys will work with you to help you make the best of a tough situation. Call 847-549-0000 to schedule a free telephone or video consultation with a member of our team today.

 

Sources:

https://www.fool.com/millionacres/real-estate-market/articles/cities-and-states-that-have-paused-evictions-due-to-covid-19/

https://www.natlawreview.com/article/commercial-real-estate-tips-week-practical-answers-sheppard-mullin-s-coronavirus

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