Commercial Lease Modification: What You Need to Know
COVID-19 has brought about a lot of changes across the country. With the pandemic, businesses are facing challenges that they have not faced before. This blog will address having your commercial lease modified in Minnesota and how a real estate attorney can help you maneuver the process. You should review the details of your commercial lease and decide if it needs modification in the event you face similar obstacles in the future.
Commercial Lease Modification Attorney
A commercial lease modification can help your business during these trouble, uncertain economic times. The real estate and business planning attorney at Morris Law Group, P.A. can help. Give us a call at (612) 895-1629 or fill out our contact form. Your first consultation is free!
COVID-19 Moratorium Minnesota
Minnesota Governor Time Walz issued various executive orders to help reduce the spread of COVID-19. Many landlords and tenants are facing challenges because their leases were prepared and signed before COVID-19 became a threat to Minnesota’s residents. Most commercial leases fail to address the problems of emergency orders, an epidemic, or a pandemic that have a major impact on the activities of businesses.
If the COVID-19 pandemic has altered your business practices, or made making your lease obligations difficult to meet, you may need to have your commercial lease modified. When a business is not open, or when it is not reaching its regular production levels, it can be challenging to have the funds needed to pay your regular monthly rent. The state moratorium has put a halt on residential evictions during the declared Peacetime Emergency, but it does not relieve a tenant of his or her responsibility to pay lease obligations or bar commercial evictions.
When it comes time for business lease renewal, or if you see the need to make changes to your lease now, a business attorney can help you through the process. There are several additions or changes you may want to make to your commercial lease after having seen the impact of the pandemic on the state as well as on your day-to-day operations. Many businesses have encountered financial challenges because of the pandemic and restrictions that applied to their operations.
Provisions You May Want To Make To Review In Your Commercial Lease
Review the lease’s force majeure provisions. Often, commercial leases have this provision to extend the time for a party to perform an obligation or maybe suspend the obligation if there are delays that are beyond reasonable control of either party. Provisions of this kind usually have specific examples listed, such as acts of God, riots, and material or labor shortages included, but most likely include a catch-all provision. These provisions usually do not include the tenant’s payment, and executive orders that closed many businesses may or may not be affected by a lease’s force majeure provision.
A commercial lease’s condemnation or eminent domain provision should also be reviewed. Typically, the tenant or landlord can terminate the lease if there is a permanent taking over of the property by the government’s condemnation powers, which is also referred to as eminent domain. Some lease agreements allow lease termination if there is a temporary takeover of the premises, and it may sometimes indicate that the rent will not be owed for the timeframe in which the tenant cannot use the property.
In the case of COVID-19 shutdowns, the legal issue may arise if an executive order triggers a clause such as eminent domain or condemnation in the lease, which may lead to reduced rent, forgiveness of rent, or a right to terminate the lease. A broader legal question could revolve around whether an executive order that prohibits business operation is considered “taking” of the property per the state or federal Constitution.
Even if none of these provisions apply, commercial landlords and tenants may find themselves in a position to renegotiate or modify lease agreements to meet their mutual needs during the pandemic.
Real estate law is a complex topic. Our real estate attorneys in Edina can help you through the commercial lease process and help you determine if your lease is currently structured in your best interest. With the right commercial lease modifications, your lease can be the right fit for both the tenant and the landlord. After seeing the challenges faced by COVID-19, your lease may need to undergo modifications so you are better prepared and know how to handle issues should there be a future pandemic, additional executive orders, or other moratoriums that affect your business and its daily operation.
Take the time to have an Edina business attorney review your commercial lease and make recommendations regarding any changes that may be needed. Your lease is important to your business, and you want to make sure you have everything in order and that all your questions are answered.
About Morris Law Group, P.A.
Integrity and trust is the foundation of our practice. Our passion for client success is matched only by our experience, our reputation for excellence, and our deep understanding of each and every client’s individual needs.
At Morris Law Group, we don’t just counsel our clients. We invest in them.
We’ve been serving the Edina and Twin Cities communities since 2002. Our attorneys provide personalized, cost-effective legal services to clients seeking help in real estate, business development, commercial litigation, and other matters.
Our experienced Edina attorneys believe that relationships matter, whether a client is trying to navigate a purchase agreement, get a business off the ground, or dissolve a partnership. Our lawyers appear regularly in state and federal court, in administrative hearings, and in various alternative dispute resolution forums, including mediation and arbitration.
Morris Law Group is the top Minnesota law firm for all of your real estate and business legal needs. We advocate for our clients with professionalism, vigor, and with a results-driven approach. Serving the Minneapolis, Saint Paul and Western Wisconsin, Twin Cities Minnesota metro area.
Let’s get started today! For more information or to book a free phone or video consultation, call 952.832.2000 or email info@morrislawmn.com. You also fill out our confidential contact form.