These truly are unprecedented and uncertain times. I’m fielding questions from business owners and building owners alike about what to do when rent is due and not paid on April 1st and beyond.
The short answer is every tenant should pay rent as required under their respective lease agreements. Failure to do so triggers the default provisions in the lease. Most, if not all leases are devoid of force majeure or excuse-of-performance provisions. So, if a tenant is in the incredible situation of not being able to pay rent because of the current pandemic and accompanying economic downturn, what options exist?
Both residential and commercial lessees should first talk to their landlords. See what options exist and what the landlord is willing to do in light of these unprecedented and uncharted times. Maybe nothing. But, landlords generally prefer to keep a good-paying tenant rather than dealing with the expense and hassle of an eviction, or the self-help remedy of a commercial lock-out, and might be willing to agree to a short-term arrangement without waiving any of the other lease obligations.
Landlords also have expenses and obligations, however. But, landlords would rather have a building with tenants who have been able to survive this as opposed to a vacant building because tenants had no choice but to default and walk the lease. Every landlord/tenant relationship will be different but an open conversation about the current realities is a good place to start.
This is a difficult time for both landlords and tenants and having the conversation now is better than waiting until rent is due and nasty letters and notices are being sent and received.
Additionally, with regard to residential properties, the Supreme Court of Texas has postponed all eviction hearings and trials until after April 19, 2020, to prevent non-paying residential tenants from losing their homes. There are some exceptions in the March 19, 2020 Order, but the expectation is that Landlords will file eviction suits after the Order expires.
I will follow up with the eviction process, the commercial lock-out process, the damages a landlord can seek and how personal guarantees (in the commercial lease context) play in the process. Stay tuned. And stay healthy.
No information in this article is intended as legal advice. For specific legal advice you should contact an attorney. If you have questions or would like more information about landlord/tenant matters, please contact Olyn Poole at 817.348.9060 or email@example.com.