Commercial Rent Forbearance Agreement


During negotiations, the parties should verify whether the tenant has or has already obtained public burden relief through programs such as the CARES Act or the Paycheck Protection Program. In these cases, the parties may decide that the forbearance agreement will begin at the end of the loan period. In other cases, landlords may consider having their tenants pass on any credit financing received directly to the landlord, especially for rents. More up-to-date information on rent relief claims can be found under “Guide for Rental Facility Applications and Other Commercial Tenants/Rental Issues”. When commercial landlords and their tenants come to the table to negotiate an indulgence agreement, both parties must keep practical and financial issues in mind while navigating an uncertain future. In addition, the landlord should consider the tenant`s request for rent relief as an opportunity to tighten certain non-financial terms of the lease agreement. For example, in the case of a retailer, the owner may require the removal or modification of exclusivity, co-location and/or sale clauses. More flexible language with respect to any of these clauses allows the owner to rent current and future empty spaces and/or give them a better insight into the retailer`s operational performance. However, there are opportunities that need to be considered for both commercial landlords and tenants during the pandemic. It is often in the best interest of commercial landlords and tenants to enter into an agreement that keeps their tenants in place until regular economic activity resumes. There are different options to facilitate this outcome, one of which is a forbearance agreement. The stable of the rental. In this case, the lessor may defer part of the tenant`s rent, but would ask the tenant to reimburse the deferred rent at a later date, either as a lump sum or by increasing the additional payments.

A variant of the rent deferral could be to limit operating costs for a short or longer period or to set a base year. A forbearance agreement is an agreement between a lessor and a tenant in which the lessor agrees to change the necessary rents as described in the rental agreement and also agrees to waive or refrain from recourse against a tenant in exchange for certain guarantees from the tenant for non-payment of rent. A forbearance contract is usually a contract signed separately by both parties to the lease. Think about the form of your agreement. Therefore, each document should also contain a provision that, at the end of the reduced term, the rental prices are either reduced to the rental electricity indicated in the original rental agreement or renegotiated by the lessor and the lessee on the basis of market-appropriate rents on that date. The federal, state and local governments have ordered business closures as well as social and travel restrictions that limit most social and business activities. .

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