Landlords, Tenants, and Lenders During the Pandemic

 In BLOG

Let’s face it….none of us has experienced anything like the current pandemic. There isn’t anyone this has not affected. In the real estate world, this impacts landlords, tenants, and lenders. All of them.

landlords tenant and lenders in the pandemic
Photo courtesy of Erik McLean

No one is avoiding impact from this

Businesses are being forced to shut their doors as we try to “flatten the curve”. With no income, tenants are asking for relief from rent. But landlords have expenses and in some cases, their agreement with their lender prohibits free rent. In an article for the Dallas Morning News, Steve Brown reminds us “Some leases in retail buildings can be voided if a large percentage of the tenants in the project close down or pull out.” This is impacting landlords, tenants, and lenders during this pandemic.

The Texas Supreme Court has blocked eviction hearings through the end of April. Eviction notices can still be filed, but they won’t be served until the moratorium ends. This does not mean the missed payments will be forgiven. All rent owed will still be due. This is true in both commercial and residential leases.

As landlords and tenants attempt to navigate their way through these issues, communication and flexibility will certainly be the key to success in negotiations. Tenants don’t want landlords to go out of business because they have no income coming in. Conversely, landlords don’t want to lose all of their tenants because those businesses can’t pay the rent. And lenders need the mortgage to be paid.

We have never been here

For all parties concerned, this is a new territory and each case will be different. Both parties will need to be flexible and creative in coming up with solutions in this far-from-normal situation. Many landlords are directing tenants to seek federal stimulus funds.

These requests are being seen by all types of real estate property: industrial, office, retail, multifamily, and hospitality. Particularly hard hit are the retail shopping centers. Many of their tenants have been forced to close in an effort to support social distancing. Owners and managers are attempting to work out solutions involving deferring the rent until better times return.

Michael Krywucki of Munsch Hardt told WFAA last week “By avoiding surprises and keeping the other side informed, the parties can increase their chances for a mutually workable solution. Since circumstances are changing weekly (or daily!) due to many factors, including government ordinances and market conditions, each side must remain nimble.”

Kurz Group is watching the situation as we all work from home. Should you have questions about what this means for your property taxes, we are here with answers. Here is an important notice about our business as it relates to Covid-19.

Leave a Comment