The coronavirus outbreak will have an impact on property across the country. The depth of the impact will depend on the economic impacts the outbreak has. KJK’s Real Estate Response Team is skilled at navigating complex leasing and financing situations and our guidance below builds on our decades of experience representing landlords, tenants, real estate investors and property managers.
The various declarations of national emergencies, at both the state and federal level, may qualify as triggering events for a force majeure clause. It is important to understand the scope of and appropriately document the disruption caused by the force majeure event. Triggering a force majeure clause prematurely or without a sufficient basis can have adverse effects.
As businesses adjust to the continuously expanding coronavirus restrictions and resulting economic impact, management should consider putting a cash management plan in place. Since topline revenues and production will likely be affected, businesses should proactively implement programs designed to control expenses and the outflow of cash.
The outbreak of the coronavirus will result in the disruption of business for many companies, and it will have a significant negative impact on cash flow and ultimately banking and financial relationships. In addition to their short term liquidity, businesses need to consider their financial covenants and how to mitigate potential defaults.
It is very likely that your lease agreements do not contain the terms “Coronavirus,” “COVID-19” or even “pandemic.” We explore the impact of force majeure clauses and the frustration doctrine on lease defaults and terminations as well as an update on legislation on evictions in Cleveland and beyond.
If you have specific questions about any of the information in our articles, please reach out directly to the author or contact the Chair of the Real Estate Response Team, Matt Viola.
Meet our Team