How does COVID-19 affect my commercial lease?And other FAQs, answered, by Mississauga, ON Lawyer

Few sectors have been affected by COVID-19 quite like commercial property. With social distancing requirements to support public health in full force, you may be among those tenants who have moved most (or all) staff to a Work-From-Home arrangement. Perhaps, you secured efficiencies from the work from home (WFH) arrangement, and plan to sustain it for the foreseeable future. If your workplace is not any one place, you may be wondering, “Why am I paying for a bricks and mortar location?”

Here, esteemed business and real estate lawyer Tarunjeet Gujral of Gujral Law Office in Mississauga, Ontario answers a few commercial lease FAQs.

Should I break or cancel my lease?

Of course, this is a decision that is as one of a kind as your business. You need to do some soul-searching. Consider if you are reacting reflexively to the social effects that have arisen during the pandemic. Even if you do not see your business ever going back to a fully staffed office, there may come a time when your team desires to return to the office, if only for a few days a week and as a “hybrid” arrangement. In the present environment, flexible work arrangements are key to retaining and attracting top talent. Many employees crave having the option of working within a socially distanced space, rather than working solely within the Zoom or Teams “universe.” Consider the longer-term implications of decisions made in the COVID-19 moment.

Go through your lease to see the options and consequences of breaking the lease as well. 

What happens if I break my lease?

Be aware that we are speaking quite generally. Contracts, situations, and property owner-tenant relationships vary considerably from client to client and business to business. So, clients should largely anticipate that, if their lease is broken before renewal comes up, they will have to foot what could be a cost-prohibitive bill. Remember: You may still be liable for payments for the balance of the lease. Additionally, depending on the commercial landlord’s current situation, they may be able to sue you.

However, it goes without saying that we are living in universally difficult times. Most landlords would rather have a tenant in the space than not. Have you talked to your landlord about rent forgiveness? Deferring payment? Speaking with the property owner/manager is the first course of action. Be sure to get any changes in writing. And bring the contract to us if you have any questions about verbiage within it. We are also experts in mediation and arbitration. We work hard to help clients avoid costly, time-consuming, and otherwise damaging legal action.

It also pays to consider that this is a “two-way street” situation. You may have spent years developing strong relationships with clients and vendors, just as your landlord may have spent years building a close relationship with you and your team. They want to preserve that relationship and will likely not want to embark on anything rash or that could destroy what took so much time to build in the first place. We look forward to taking a deeper dive into your situation and assisting you during these challenging times.