Answers to COVID-19 questions from CRE owners, landlords, managers

Real Estate | 7 Apr |

Below is “Q&A” from a number of recent calls with commercial landlord and commercial property management clients regarding COVID-19 obligations to tenants and visitors. Hopefully, some of you will find this useful as it pertains to recent global issues.

Q: If someone in one of my buildings tests positive for the virus do I need to close the entire building?

A: Not likely, unless the building contains a significant amount of shared, “common” or meeting space, there is likely no need to close the entire building.

That said, “open” and shared spaces and “common” amenities should be closed until the virus threat has been resolved (e.g., in-building workout facilities, conference rooms and centers, kitchens, and break-rooms). And, the continued use of shared spaces and amenities should be conditioned upon the individual users signing waivers accepting the risk. Group events occurring in the building, e.g., expos, meet and greets, and breakfasts, should be rescheduled.

Q: Do I need to do extra cleaning or disinfecting for the tenants at my building?

A: Probably not. Take a look at your lease and follow the terms of the lease on cleaning obligations. And, in all likelihood, the costs associated with “extra” cleaning will be an obligation for the tenant(s) to cover.

Patrick R. MacQueen is a founder of MacQueen & Gottlieb, PLC.

Q: Do I have an obligation to screen visitors in the lobby by asking questions or scanning temperatures?

A: Probably not. Several of our clients have instituted this practice but it is not likely required in all instances. Commercial owners and managers have a general duty of care and a duty to safeguard tenants and occupants. Following and implementing the list of “best practices” (many of which are outlined in this Alert) is one way to satisfy your obligations, i.e., following the practices referenced in this article, including cleaning, disclosing positive tests and working with tenants and occupants to follow CDC, state, county and city guidelines for addressing the threat this virus imposes, will likely cover most of your obligations.

Q: We had a tenant report to us that one of the tenant’s employees tested positive for COVID-19. As a building owner and property manager, do we have to provide notice to others and what should we say?

A: Unfortunately, this one is not an easy “Yes”or“No.”Theanswerdependsonanumber of variables. Indeed, owners and managers must balance a number of factors, including: (i) the need to keep the building running; (ii) safeguarding tenants and occupants; and (iii) health-related obligations (e.g., HIPAA, ADA, etc.).

With these variables in mind, here is a list of suggested best practices:

1. Instruct that all tenants notify owners or building management immediately of a suspected or known COVID-19 diagnosis or exposure;

2. Establish and implement a clear and consistent policy for responding to and addressing reports of a positive COVID-19 test or exposure;

3. Communicate regularly with designated tenant representatives regarding the health of the tenant’s employees.

4. Landlords likely have a legal obligation to notify all other tenants and occupants of a building that a person who has entered the building has tested positive for the virus.

5. Additionally, as part of this obligation, landlords need to inform building what steps are being taken as a result of this finding.

6. The name of the affected person should never be disclosed. However, it is permissible to notify other tenants and occupants of the building of the floor on which the affected tenant works, so long as such notification is crafted so as not to provide the affected person’s identity.

7. Deep clean and disinfect all common areas affected – restrooms, elevators, lobbies, etc., and inform tenants and occupants of the steps taken and procedures going forward.

Q: Do tenants have a right to stop paying their rent due to the virus?

A: Not in most cases. Whether a tenant has a right to stop paying rent will largely depend on the express terms of the lease and other legal concepts, like “frustration of purpose”, “impracticability” or any one of a number of other theories that have been circulated recently.

Note: None of the commercial leases we have reviewed over the last 3-4 weeks provide a tenant with an automatic right to terminate the lease or receive a rent holiday. This analysis may change if a building is completely shut down or a project is closed.

Q: Can I post or email a notice advising people not to enter the Building if they meet certain criteria?

A: Yes. Many landlords and managers have already posted these notices on their buildings. Any notice should follow the CDC guidelines and be updated as CDC guidelines are updated.

If you have additional legal questions about the above topic or other real estate issues relating to the ever-changing COVID-19, feel free to contact me.

 

Patrick R. MacQueen is a founder of MacQueen & Gottlieb, PLC. If you are interested in learning more on how you could be affected by the coronavirus, contact him to discuss.

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