“Should I pay my April rent?” That’s the question every restaurant wants to know.  What should you do if you are not allowed to operate from your space? Or if you are unable to pay your rent?

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The short answer is this: Know your rights and then do something. Let me walk you through a quick, 3-step process to help you know what to do.

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Step 1: Find your lease.  I know, I know, sounds easy.  But be sure to locate the fully executed version of your lease, including all attachments.

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Step 2: Review your lease--carefully.

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But what do I look for? Great question.  There are a number of ways that a lease may give you rights that could protect you from having to pay rent during this time period, but let me point you to a couple of the most common clauses that you should look for:

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• Look for any remedies where access to the premises is restricted or prohibited. Many leases state that the requirement to pay rent is independent of any of landlord’s obligations under the lease. But if there is a right to offset, that will likely have been negotiated specifically into the lease specifically. So look for language that may say you are not obligated to pay rent if access is restricted.  If you find that language, great news!

• Look for a force majeure clause that may say you do not have to pay rent in the event something happens that is beyond the party’s reasonable control. If your lease contains this type of clause, it likely states that performance of obligations are excused to the extent prevented or delayed by the listed acts. But note—these clauses are often read by courts in a very narrow fashion. Look for language that is broad enough to capture delays or inability to operate because of disease.

• Determine if your lease requires the landlord to provide 24/7 access to the premises. Some leases require this but also have carve-outs or exceptions. What does yours say? Are there are any exceptions to that obligation? Does your lease say what happens if access is restricted by the landlord, the tenant, or the government? See if your lease covers this type of interruption of access.

 

As I mentioned, there are many many other provisions which may give you certain rights.  For example, a covenant of quiet enjoyment, abatement due to government condemnation, and many more.  If you are not sure if you have certain rights or not, call me (214-329-1846) or email me (jpettit@pettitfirm.com)

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Step 3: Do something—even if you do not see a “slam dunk” clause in you lease.

 

Just because your lease may not have a “slam dunk” clause to protect you, you may still have very valid arguments you could make if you want to move forward with aggressive negotiation or potential litigation with your landlord. 

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Just this week, I have discussed the following legal arguments with clients who are considering litigation to protect themselves from having to pay rent or experience a lockout during this time:

• Impossibility

• Frustration of purpose

• Constitutional claims for inverse condemnation claim against local governments due to government orders to close without providing just compensation as required by the Fifth Amendment

 

Caution--I would not say outright that you will not be paying rent. There is probably language in your lease that telling your landlord you are not going to pay is a “threatened breach,” so be very careful with that type of language right now. Some leases also have opening hours requirements, so there may be a couple areas in which you are already technically in default at the moment, so be careful.

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My best suggestion for right now is this: don’t just sit still. Do something. Now is the time to seek some rent relief from your landlord. Government assistance—if any—probably won’t arrive for at least a month or two. In the meantime, April rent is due. And you need to make a decision. 

 

Don’t get locked out or have your lease terminated for something that was beyond your control. Call me (214-329-1846) or email me (jpettit@pettitfirm.com) to discuss your options.  And have a copy of your lease ready to go.  Talk to you soon.