Rent Deferment Agreements During COVID-19

As widespread social distancing measures and government-mandated shut-down orders due to COVID-19 are enforced, tenants and landlords face mounting pressure to meet their respective lease agreement obligations.

For many tenants, lease obligations are a significant portion of overall business expenses and the obligation to pay rent during a period of business interruption can put a tenant's business in jeopardy. In recognition of the risk to tenants and the related longer-term risk to themselves, landlords may enter into rent deferment agreements with vulnerable tenants. The appropriateness of the rent deferment agreement and the terms contained therein varies on a tenant- by-tenant basis. The value of offering a tenant a rent deferment agreement is also contingent on the prospects of retaining a group of tenants and the prospects of reletting any premises made vacant by a tenant whose business fails during the period of business interruption.