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Rulings on COVID-19 Defenses In Commercial Real Estate
Despite some new variants and a possible resurgence in the fall, the pandemic closures seem to be finally coming to an end. And with it, so too have most of the COVID-19 defenses in court cases involving commercial leases. However, all may not be foreclosed for a commercial tenant, particularly where a tenant is able to point to a specific provision of its lease that could excuse its obligation to pay rent during the closure of its business.
As a consequence of the pandemic, many commercial tenants were unable to pay rent and raised defenses — chief among them arguments based on the common-law doctrines of frustration of purpose and impossibility, as well as force majeure provisions in their leases — seeking to be excused from the nonpayment of rent. Consequently, courts were left to grapple with these issues with relatively little precedent to guide them, as there was no prevailing legal authority from the last time that the U.S. saw a pandemic over 100 years ago during the 1918 influenza pandemic that was caused by the H1N1 virus.
The federal government provided expansive emergency relief funds to businesses and tenants to keep them afloat. As a result, courts have had the opportunity to rule on numerous COVID-era cases litigated between commercial landlords and tenants, issuing watershed rulings concerning COVID-19 defenses that will be analyzed in this article.
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