Webinar Recap: Business and Commercial Real Estate Update – COVID-19 and Recession Preparation
It’s tempting to think there’s no point in trying to plan ahead when challenges to our public and economic health arise every day. Yet now is exactly the right time to control what we can, take advantage of new and existing opportunities to fortify our financial positions and prepare for the next phase.
Holmquist + Gardiner hosted a webinar on Thursday, June 4 examining the latest that business owners need to know about the impacts of COVID-19 in Seattle and Washington state.
Here are the main takeaways:
New Rules Commercial & Residential Real Estate
In late May, Washington Governor Jay Inslee extended the emergency order relating to landlords and tenants.
– Evictions: Through August 1, landlords and property managers cannot collect late fees, issue notices or threats of eviction or send 14-day notices for nonpayment. Exemptions include a sale, or when there is a significant and immediate threat to the property. For residential rental properties, evictions are allowed if you plan to move in and make the resident your primary domicile. The City of Seattle has even more complex requirements for residential evictions. Key Takeaway: Send tenants statements with their balance so they know where they stand and reiterate that they are still required to pay.
– Rent & deposit increases: The proclamation prohibits raising rents or deposits for residential and commercial properties until August 1. For commercial rental property, the no-increase ban applies only if the tenant has been “materially impacted” by COVID-19, unless the signed lease states a rent increase would occur. Key Takeaway: Review your lease documents to see if you meet the pre-existing increase exception.
These orders are changing frequently. Always check with your legal counsel for the latest information.
Considerations for Reopening, Recovery & Recession Preparations
Business owners and managers are looking for as much financial relief as possible as they navigate cash flow from closures and reduced operations.
– Rent deferment & abatement: Many retail, medical/dental and office tenants are seeking rent deferment or abatement as they navigate reduced or suspended cash flow from the pandemic. In many cases, these requests are reasonable, but whether or not a landlord agrees is a business decision. Key Takeaway: Stay in contact with your landlord about your business plans and financial position. Tenants who talk to landlords and keep an open line of communication will be more successful.
– Insurance claims: There’s been a lot of discussion about whether COVID-19 qualifies as business interruption or force majeure event. Claims are being made, even though there is almost never a force majeure event that would prevent you or a tenant from paying rent. Key Takeaway: Look at your policy and tender a claim. The court system will be figuring out what qualifies as the months rolls on.
– Legal & financial documents: Course of conduct can no longer be standard operating procedure. As we approach Q3 and an expected downturn, now is not the time to take chances. Key Takeaway: Review all your legal and financial agreements to make sure they are in order and begin properly documenting everything you’re doing, even with long-term trusted tenants and partners. Now is not the time for handshake only deals.
For more details on any of these factors, you can watch the full webinar below. If you have specific questions, please contact us. Also - save the date for our next webinar on July 16 and look for a registration page to sign up in the coming weeks!
