Cares Act and Commercial Lease Agreements

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, in response to the economic fallout caused by the COVID-19 pandemic. One of the provisions under the CARES Act that has raised questions among commercial leaseholders and landlords alike is the section on commercial lease agreements.

The CARES Act provides relief for tenants who have been impacted by the coronavirus outbreak. Specifically, tenants who are unable to pay rent due to financial hardships caused by COVID-19 may be entitled to certain protections under the law. However, it is vital to understand the implications of the CARES Act on commercial lease agreements and how it affects both tenants and landlords.

Firstly, it is essential to note that the CARES Act only applies to commercial properties that have a federally backed mortgage. This means that if the landlord`s mortgage is not federally backed, the CARES Act does not apply. Moreover, the CARES Act only covers commercial leases that were entered into before March 2020. This means that any new leases entered into after March 2020 are not covered by the Act.

If a tenant is unable to pay rent due to COVID-19 related financial hardships, the CARES Act provides a temporary moratorium on evictions. This means that landlords are prohibited from evicting tenants who are unable to pay rent due to COVID-19 until July 24, 2020. However, it is important to note that tenants are still obligated to pay rent. This means that tenants who are unable to pay rent are not exempt from paying rent altogether but are given temporary relief from eviction.

Furthermore, under the CARES Act, landlords are not allowed to charge late fees or penalties to tenants who are unable to pay rent due to COVID-19 related financial hardships. This means that tenants who are unable to pay rent do not have to worry about accumulating late fees or penalties on top of their rent payment.

In conclusion, the CARES Act provides temporary relief for commercial leaseholders who are unable to pay rent due to COVID-19 related financial hardships. Landlords who have a federally backed mortgage are prohibited from evicting tenants for non-payment of rent until July 24, 2020. However, tenants are still obligated to pay rent, and the moratorium on evictions only provides temporary relief. It is important for both tenants and landlords to understand the implications of the CARES Act on commercial lease agreements and to seek legal advice if necessary.