Structuring Office Leases in the Economic Recovery: Increased Work From Home, Office Sharing
Negotiating Amendments, Abatements, Deferrals, Subleases and Assignments
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Real Property - Transactions
- event Date
Thursday, February 3, 2022
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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This CLE webinar will provide practical guidance to leasing attorneys facing requests to renegotiate a commercial lease during this economic recovery and the active work-from-home environment. Counsel for landlords and tenants will be provided solutions that range from contractual-based solutions creating abatements or deferrals, common law solutions that focus on doctrines that offer (or limit) early termination, and contextual solutions that look at the landlord's and tenant's financial situations--both currently and prospectively--and attempts to creatively meet all stakeholders' needs.
Mr. Garfield has represented landlords and tenants alike in negotiating retail, office and residential leases. He has authored covenants and declarations for all kinds of developments from duplexes to PUD’s including high-end subdivisions. Mr. Garfield has represented banks and private lenders in their lending activities as well as the restructure of non-performing loans and where needed collection activity including foreclosures and UCC sales. He has represented purchasers and sellers of all manner of real estate including fractional, single family, duplexes, commercial properties, farm and ranch lands and parcels earmarked for development.
Mr. Lang is a member of the firm’s Real Estate Practice. On the leasing side, he represents landlords, tenants, sublandlords, and subtenants in connection to office leases and subleases, as well as retail leases for national retailers. With respect to acquisitions and dispositions, he represents buyers and sellers of commercial properties across all asset classes. On the lending side, he represents lenders and borrowers in connection to complex real estate financings (including both mortgage and mezzanine loans) related to the acquisition, construction or refinancing of commercial properties throughout the U.S. Mr. Lang has also represented various financial institutions in connection with restructurings of distressed assets including workouts, forbearance agreements, notes sales, deed-in-lieu of foreclosure agreements, and litigation related to foreclosures of real property.
The increased transition to work-from-home has led to renewed renegotiations of office leases. Companies large and small face concerns as to obligations under their commercial leases. There are several potential solutions for both landlords and tenants.
Some businesses may consider whether office sharing or hoteling is the solution to reducing their footprint in office space. Still, co-tenants have to consider an agreement that addresses the ownership of assets and repairs of the leased property.
The parties must determine whether a proper contractual resolution is possible. Tenants positioned for a true resurgence may want to look at abatements or deferrals. Tenants subject to a true contraction may consider subleasing or assigning portions of the space or term of the lease to a new tenant.
Outside of contract, there are common law solutions if either party identifies grounds to pursue (or defend) a claim regarding the doctrines of impossibility, impracticality of purpose, or frustration of purpose.
Finally, the stakeholders must consider the context of the overarching situation when attempting negotiations. What is the current occupancy level of an office development and how will that impact negotiations? What is the financial condition of the tenant? Is bankruptcy more or less a certainty such that a deferral is simply moving a few months down the calendar?
Tenants negotiating new leases should consider language that will address rent relief if and when there is another pandemic or other health emergency that results in closures or reduced business hours or restricted occupancies.
Listen as our expert panel discusses the possibilities to negotiate and resolve lease issues landlords and tenants face in light of the current economic trends and addresses the contractual, common law, and contextual issues that come into play when trying to meet each parties' needs.
- Overview of current economic status and state of commercial leased real estate
- Contract law solutions
- Abatement
- Partial
- Total
- Deferrals
- Subleases
- Assignments
- Abatement
- Common law solutions
- Doctrine of impossibility
- The doctrine of impracticality of purpose
- The doctrine of frustration of purpose
- Contextual solutions
- Insurance
The panel will review these and other relevant topics:
- When should a landlord consider a contractual solution for a defaulting tenant? Which contract solutions work best in each economic situation?
- How does common law impact a tenant's ability to terminate early, and what grounds can landlords use to dispute such terminations?
- For developing a tailored solution, what is the global context--unleased space in a complex, access to temporary funding, signs of an economic upswing, etc.-- for developing a tailored solution?
- How to address emergency governmental financial grants or loans
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