The widespread impact of the COVID-19 pandemic on the ability of businesses to continue operations in leased spaces should prompt landlords and tenants to have an open dialogue toward practical solutions. Because no current federal legislation can be directly applied to commercial leases, a review of common contractual provisions and defenses, bankruptcy issues, and updated legal frameworks in jurisdictions across the country is vital for landlords and tenants seeking to find a path forward.

Few tenants and landlords are weathering the COVID-19 pandemic without significant—if not total—lost revenue. More than 16 million people are out of work, and while labor costs may be mitigated by furloughs or layoffs, real estate costs, typically a company’s second highest expense, is a contractual obligation that is commonly accompanied by personal or corporate guarantees, letters of credit, or cash deposits. Some states have issued executive orders temporarily prohibiting tenant evictions and mortgage foreclosures, but such short-term relief may not be enough to help the tenant’s business to survive.