[WSBARP] Retail Tenants and Commercial Frustration

[Roger Moss]

Andrew, I commend you for thinking holistically, creatively, and with an eye on using professional neutrals to navigate these issues in commercial leasing.

Here’s my template:

1. The moratoria operating in many jurisdictions covering residential and commercial scenarios alike are first and foremost a call for tenants and landlords to slow down, avoid precipitous action, take stock of circumstances, and work on solutions together. With rare exceptions they point to rent deferment not abatement; it has amazed me to see how confusion there is on that point.

2. For commercial leases, I point to force majeure clauses and especially destruction of premises provisions (particularly in retail) as themes to organize conversation - for over 100 years, rent abatement has been an accepted remedy when external forces make retail spaces unusable. I do not hold that these provisions can be applied legally to the pandemic, but I have gotten people talking productively by reminding them the idea is sound. It is an industry practice.

3. Innovative mediated approaches guided by a leasing expert should be deployed as early as possible, when they can deliver the most value. 

There is a cohort of specially trained mediators working on these issues in California and the Northwest including in BC. Let me know if you’d like to be connected with them. We have also been doing presentations on best practices for tenants and landlords in addressing commercial leasing tensions and disputes animated by COVID. All the work is being done quickly, and entirely online which is standard practice for those of us involved.

Thank you Andrew for your thoughtful posting.

Roger A. Moss, Esq. 
Pacific Conflict Intervention
206.790.1971 Seattle
415.371.9724 San Francisco
www.pacific-ci.com

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> On Apr 22, 2020, at 7:02 PM, Andrew Hay <andrewhay at washingtonlaw.net> wrote:
> 
> This is probably coming up for many folks, especially with retail clients.
>  
> My initial legal framework for this is
>  
>               Is there a force majeure clause in the lease?
>  
>               Does the pandemic and/or its restrictions qualify for commercial frustration or impracticability of performance?
>  
> Does force majeure or commercial frustration/impracticability defense help the individual guarantors?
>  
> For handling this problem
>  
>               Informal discussion with LL – first step
>               Formal mediation second – 2nd
>               Litigation or arbitration - 3rd
>  
> Does this seem sound?  How strong is a commercial frustration or impracticability argument for this pandemic?
>  
>  
> Andrew Hay
> Hay & Swann PLLC
> 201 S. 34th St.
> Tacoma, WA 98418
> www.washingtonlaw.net <http://www.washingtonlaw.net/>
> andrewhay at washingtonlaw.net <mailto:andrewhay at washingtonlaw.net>
> 253.272.2400 (w)
> 253.377.3085 (c)
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