Practical Guidance for Retail Landlords on Tenant COVID-19 Closures
During these winter months, many retail tenants have opted to close their doors to the public rather than remain open with limited occupancy and other operating restrictions due to COVID-19. Below are some practical considerations that a landlord may want to consider if one or more of its retail tenants is considering closing for any period of time due to COVID-19 restrictions.
- Duration of Permitted Closure: Does the landlord want to require the tenant to reopen by a date certain or link the reopening to the status of certain governmental restrictions and regulations?
- Status of Premises During Permitted Closure: Ensure that the premises are left clean, that the tenant has removed any items that could spoil, and that the tenant has taken steps to reduce the changes of a leak, fire or other damage in its absence.
- Insurance: Confirm that the tenant's vacancy will not impact (reduce or eliminate) the tenant's insurance coverage.
- Exposure: Does the landlord want the tenant to install window coverings or special signs during the closure? Consider the exposure of the vacant property to loiterers and the effect that the vacancy may have on other tenants or occupants of the property or neighboring properties.
- Inspection: Require routine inspections by the tenant of the premises and confirm that the lease permits the landlord to freely access and inspect the premises.
- Utilities: Confirm the tenant's continuing responsibility for handling of mail, deliveries, pest control, trash removal and other utilities.
For additional guidance on how other lease covenants and obligations (such as cotenancy, renewal rights, exclusive use covenants and rent obligations) may be impacted by tenant closures, see Holland & Knight's previous alert, "Leasing Guidance During COVID-19: A Look at Various Lease Covenants," April 16, 2020.