Insight

Working with troubled tenants in the time of COVID-19

Working with troubled tenants in the time of COVID-19

Vikrama S. Chandrashekar

Vikrama S. Chandrashekar

April 5, 2021 06:37 PM

Daily business conditions are changing rapidly as a result of the COVID-19 outbreak, and it is our goal to keep up with those changes to provide you up-to-date, practical guidance, tips and answers.

Workouts. This article addresses the legal and enforcement landscape concerning eviction of commercial tenants who were, or will be, unable to meet their lease obligations. However, we know that most landlords are focused on keeping tenants, not evicting them. The willingness to work with your tenants to reach deals during the current crisis may appear, on its face, to be altruistic; the reality, however, is that often it is just as necessary for landlords to work with their tenants out of self-preservation. To that end, we offer the following guidance and hope you will find it helpful in dealing with troubled tenants.

We know that most landlords reading this probably already have reached out to their tenants and are proactively working to negotiate deals to help guide them through the changes in their business and to maintain open lines of communication. This is important because communication now, along with an acknowledgment of what your tenants are facing, will make your tenants more likely to continue to communicate with you throughout their struggles. The more you know, the better you can prepare. There is nothing worse than surprise.

Be flexible. It often is said that “necessity is the mother of invention.” We anticipate that workouts between landlords and tenants in the time of COVID-19 will lead to creative solutions – both financial and nonfinancial – that strike a balance between tenants’ reduced revenues and landlords’ need for cash flow. There is no one-size-fits-all approach, so it is important to listen to your tenants’ requests and be clear with them about ways in which you can, and cannot, have flexibility in reaching a workout.

Review leases. While this guidance applies generally, it applies most forcefully to inherited leases. Before you begin negotiating a workout, carefully review your leases to see what unexpected exposure you may have.

If you have questions about any of the above guidance, we recommend reaching out to your attorney, accountant or other professionals who can answer your questions and provide specific advice. Evictions. The primary change in terms of evicting tenants involves limitations on evictions at the national, state and local levels. The city and county of Denver, along with other municipalities, has ordered the suspension of evictions. Sheriffs statewide interpret this order as applying to both residential and commercial evictions and will not undertake such evictions. At the state level, Gov. Jared Polis’ Executive Order D 2020 012 (March 20) has ordered state agencies to work with landlords to attempt to create a lawful measure to suspend evictions until the end of April for the nonpayment of rent and minor tenancy violations. We anticipate that you are apprehensive about what this means for tenants who have defaulted, or will default, on their lease obligations while these orders are in effect. First and foremost, while the language of these suspension orders themselves do not explicitly apply to commercial evictions, it appears that most, if not all, jurisdictions are taking that position. That said, even if a particular jurisdiction will enforce a commercial eviction, it is important to be aware of the optics of moving forward with such an eviction in the midst of the outbreak, particularly since all businesses currently are not operational, except for those providing essential services. We encourage you to weigh the possibility of negative optics in making the decision whether to proceed with eviction. We also anticipate many tenants may proactively open up a dialogue with you about how to proceed, including by seeking abatements or other concessions. In those situations, our workout guidance above will help you develop creative solutions during this uncertain period. Second, the above orders are executive in nature and do not affect the operation of the court systems, which in large part continue to operate with limitations necessitated by the COVID-19 outbreak (such as telephonic hearings). In other words, nothing precludes a commercial landlord from filing a complaint to begin the eviction process. While under normal circumstances, eviction actions proceed more rapidly than other civil actions, we would advise you to be prepared for things to move more slowly under current conditions. Between the reluctance of local sheriffs and, potentially, judges to push forward with evictions, the expected inability of tenants to respond to complaints, and the likelihood of “shelter-in-place” or similar shutdown orders, the filing of a complaint may not go anywhere until such orders are lifted.

As with most other aspects of business and life during this time, things are uncertain. Professionals are available to provide you with advice, guidance and expertise to help you navigate the uncertainty and make the best decision for your business. While we wait for life to return to normal, we ask that you stay safe, healthy and optimistic.

This article was co-authored by Vikrama S. Chandrashekar, David A. Laird, Thomas M. List, and Merc Pittinos.

Related Articles

Leasing Commercial Real Estate


by Best Lawyers

We have compiled this “leasing commercial real estate checklist” to help guide discussions with a commercial real estate lawyer before signing a lease.

Unseen figure with pen points to apartment building model

The Commercial Conundrum


by Brion J. Kirsch

Even prior to 2020, commercial real estate was experiencing setbacks. Coupled with the challenges of new working environments and less need for commercial spaces, landlords are left with increasingly vacant buildings to fill. Below is a primer on how to move forward.

Pile of old chairs and office equipment with blue backdrop

WATCH: Best Lawyers Discusses COVID-19 & Rental Agreements


by Best Lawyers

Three legal experts join the CEO of Best Lawyers to talk about a general approach to “the rental” market and what happens if tenants can’t pay rent in May.

COVID-19 Panel: Rental Agreements

Trending Articles

Introducing the 2026 Best Lawyers Awards in Australia, Japan, New Zealand and Singapore


by Jennifer Verta

This year’s awards reflect the strength of the Best Lawyers network and its role in elevating legal talent worldwide.

2026 Best Lawyers Awards in Australia, Japan, New Zealand and Singapore

Discover The Best Lawyers in Spain 2025 Edition


by Jennifer Verta

Highlighting Spain’s leading legal professionals and rising talents.

Flags of Spain, representing Best Lawyers country

How to Increase Your Online Visibility With a Legal Directory Profile


by Jennifer Verta

Maximize your firm’s reach with a legal directory profile.

Image of a legal directory profile

Effective Communication: A Conversation with Jefferson Fisher


by Jamilla Tabbara

The power of effective communication beyond the law.

 Image of Jefferson Fisher and Phillip Greer engaged in a conversation about effective communication

Paramount Hit With NY Class Action Lawsuit Over Mass Layoffs


by Gregory Sirico

Paramount Global faces a class action lawsuit for allegedly violating New York's WARN Act after laying off 300+ employees without proper notice in September.

Animated man in suit being erased with Paramount logo in background

The Future of Family Law: 3 Top Trends Driving the Field


by Gregory Sirico

How technology, mental health awareness and alternative dispute resolution are transforming family law to better support evolving family dynamics.

Animated child looking at staircase to beach scene

The 2025 Legal Outlook Survey Results Are In


by Jennifer Verta

Discover what Best Lawyers honorees see ahead for the legal industry.

Person standing at a crossroads with multiple intersecting paths and a signpost.

Safe Drinking Water Is the Law, First Nations Tell Canada in $1.1B Class Action


by Gregory Sirico

Canada's argument that it has "no legal obligation" to provide First Nations with clean drinking water has sparked a major human rights debate.

Individual drinking water in front of window

New Mass. Child Custody Bills Could Transform US Family Law


by Gregory Sirico

How new shared-parenting child custody bills may reshape family law in the state and set a national precedent.

Two children in a field holding hands with parents

The Best Lawyers Network: Global Recognition with Long-term Value


by Jamilla Tabbara

Learn how Best Lawyers' peer-review process helps recognized lawyers attract more clients and referral opportunities.

Lawyers networking

Jefferson Fisher: The Secrets to Influential Legal Marketing


by Jennifer Verta

How lawyers can apply Jefferson Fisher’s communication and marketing strategies to build trust, attract clients and grow their practice.

Portrait of Jefferson Fisher a legal marketing expert

Finding the Right Divorce Attorney


by Best Lawyers

Divorce proceedings are inherently a complex legal undertaking. Hiring the right divorce attorney can make all the difference in the outcome of any case.

Person at a computer holding a phone and pen

The Future of Canadian Law. Insights from Best Lawyers: Ones to Watch Honorees


by Jennifer Verta

Emerging leaders in Canada share their perspectives on the challenges and opportunities shaping the future of Canadian law

Digital eye with futuristic overlays, symbolizing legal innovation and technology

New Texas Law Opens Door for Non-Lawyers to Practice


by Gregory Sirico

Texas is at a critical turning point in addressing longstanding legal challenges. Could licensing paralegals to provide legal services to low-income and rural communities close the justice gap?

Animated figures walk up a steep hill with hand

Is Your Law Firm’s Website Driving Clients Away?


by Jamilla Tabbara

Identify key website issues that may be affecting client engagement and retention.

Phone displaying 'This site cannot be reached' message

Family Law Wrestles With Ethics as It Embraces Technology


by Michele M. Jochner

Generative AI is revolutionizing family law with far-reaching implications for the practice area.

Microchip above animated head with eyes closed