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  1. #1

    A quick legal question

    Hi all,

    So, I hope it is okay that I post this here... just trying to get some quick legal info.

    So, thanks to Covid19, my wifeís business (she is a family therapist) is in the toilet.

    She is renting an office space right now in NJ.

    She has lost all of her clients, so she is looking to break her lease.

    I believe the rule in NJ is that you are then responsible for paying the rest of the lease worth of rent, or until the space gets rented out (and it wonít be.)

    Is this the case? Has anything changed because of this virus?

    I hope it is okay to post this here... in a bit of a bind, and trying to figure stuff out before we hit April and need to pay another month of rent for a space that is unused

    Thank you!

  2. #2
    Join Date
    Feb 2008
    Location
    New Bern, NC unless it's a home football game then I'm grilling on Devil's Alley
    I hope it works out. This isn't an anwer, but both my sister and my girlfriend are also therapists, and they are still working using video therapy sessions. It's not ideal, but thankfully it keeps their income going. Ironically, my girlfriend has been even busier than usual, since her patients are not cancelling sessions as often as they usually do. They cancel due to illness, transportation, other conflicts. But since they are at home, too, they have nowhere else to be and aren't affected by a flat tire.
    Q "Why do you like Duke, you didn't even go there." A "Because my art school didn't have a basketball team."

  3. #3
    Quote Originally Posted by Lord Ash View Post
    Hi all,

    So, I hope it is okay that I post this here... just trying to get some quick legal info.

    So, thanks to Covid19, my wifeís business (she is a family therapist) is in the toilet.

    She is renting an office space right now in NJ.

    She has lost all of her clients, so she is looking to break her lease.

    I believe the rule in NJ is that you are then responsible for paying the rest of the lease worth of rent, or until the space gets rented out (and it wonít be.)

    Is this the case? Has anything changed because of this virus?

    I hope it is okay to post this here... in a bit of a bind, and trying to figure stuff out before we hit April and need to pay another month of rent for a space that is unused

    Thank you!
    I am not licensed in New Jersey and do not know local law there, so this is not advice you can rely on. But that is generally the damages calculation.

    No easy answers right now. Many tenants are claiming casualty, condemnation (if the business is ordered to close by the government under a theory of temporary taking), Force majeure, impossibility and frustration of purpose and taking the position that rent must be abated during the pandemic.

    If that sounds like the kitchen sink is included, it is.

    My practical advice is that now is not the time to concede default. Instead, it is the time to assert that no rent should be due and request that the landlord deal with you in good faith.

    Have you looking into relief under the bill passed through the Senate? Iím jumping on a webinar in 15 minutes about the SBA loan program.
    Carolina delenda est

  4. #4
    Join Date
    Oct 2011
    Location
    Just down the road :(
    Can't answer your question.
    Do, however, consider that anxiety & tension are high right now with viral fear and families quarantined in closed spaces. Her clients may be eager to talk to someone even if they can't get in. There are free HIPAA-compliant telehealth platforms (eg doxy.me) and HIPAA compliance is waivered right now anyway, so she could use Skype or some other service temporarily if she prefers. She might be able to secure her income stream by reaching out to clients to wish them well and let them know that she is still able to provide help if anyone needs it.

  5. #5
    Join Date
    Feb 2008
    Location
    New Bern, NC unless it's a home football game then I'm grilling on Devil's Alley
    Quote Originally Posted by bedeviled View Post
    Can't answer your question.
    Do, however, consider that anxiety & tension are high right now with viral fear and families quarantined in closed spaces. Her clients may be eager to talk to someone even if they can't get in. There are free HIPAA-compliant telehealth platforms (eg doxy.me) and HIPAA compliance is waivered right now anyway, so she could use Skype or some other service temporarily if she prefers. She might be able to secure her income stream by reaching out to clients to wish them well and let them know that she is still able to provide help if anyone needs it.
    My sister and GF (both mentioned above) are using Zoom and Doxy. They have been job saving. (And of course saving for their patients as well.)
    Q "Why do you like Duke, you didn't even go there." A "Because my art school didn't have a basketball team."

  6. #6
    Quote Originally Posted by cato View Post
    My practical advice is that now is not the time to concede default. Instead, it is the time to assert that no rent should be due and request that the landlord deal with you in good faith.
    I'm not a lawyer either, but this sounds like good solid advice. As the old saying goes, "Where is the harm in asking?"

    I would also expect quite a few laws (federal, state and local) to be passed in the coming days to deal with exactly this issue. Now is not the time to panic.

  7. #7
    Join Date
    Sep 2007
    Location
    Undisclosed
    Quote Originally Posted by cato View Post
    I am not licensed in New Jersey and do not know local law there, so this is not advice you can rely on. But that is generally the damages calculation.

    No easy answers right now. Many tenants are claiming casualty, condemnation (if the business is ordered to close by the government under a theory of temporary taking), Force majeure, impossibility and frustration of purpose and taking the position that rent must be abated during the pandemic.

    If that sounds like the kitchen sink is included, it is.

    My practical advice is that now is not the time to concede default. Instead, it is the time to assert that no rent should be due and request that the landlord deal with you in good faith.

    Have you looking into relief under the bill passed through the Senate? Iím jumping on a webinar in 15 minutes about the SBA loan program.
    As cato says, law in landlord-tenant issues are generally governed by state law and thus may vary from jurisdiction to jurisdiction. And IANAL licensed in NJ so canít really answer the question. The terms of the specific contract are also important to answer the question. Cato lays out some of the legal concepts that may or may not apply as well.

    Many landlords donít want to lose tenants right now, and some even have hearts. A phone call up front may save legal headaches on the back end to see if he/she/it will work with the situation.

    Good luck, I know a lot of businesses in this situation right now.
    "We're only tourists in this life
    Only tourists but the view is nice"

    -- David Byrne

  8. #8
    Join Date
    Feb 2007
    Location
    Washington, D.C.

    Yep

    Quote Originally Posted by OldPhiKap View Post
    As cato says, law in landlord-tenant issues are generally governed by state law and thus may vary from jurisdiction to jurisdiction. And IANAL licensed in NJ so canít really answer the question. The terms of the specific contract are also important to answer the question. Cato lays out some of the legal concepts that may or may not apply as well.

    Many landlords donít want to lose tenants right now, and some even have hearts. A phone call up front may save legal headaches on the back end to see if he/she/it will work with the situation.

    Good luck, I know a lot of businesses in this situation right now.
    I'm only licensed in Washington, DC, so can't really tell you either, but OldPhiKap's thinking makes sense to me. I'd also add that landlords also want to avoid adverse publicity and wouldn't want to read about their being unreasonable in the local paper (assuming you still have one).

  9. #9
    Quote Originally Posted by MChambers View Post
    I'm only licensed in Washington, DC, so can't really tell you either, but OldPhiKap's thinking makes sense to me. I'd also add that landlords also want to avoid adverse publicity and wouldn't want to read about their being unreasonable in the local paper (assuming you still have one).
    I am reviewing as many notices as I can, coming from both Landlords and Tenants asserting various positions, and I am pleased to see so many people taking reasonable positions. But those people all seem to have reserves. The Landlords that rely on rental income to pay debt service are taking relatively hard line positions, from an unrepresentative sample.

    I have also reviewed more revisions to Force majeure provisions this past month than in my career up to this point.
    Carolina delenda est

  10. #10
    Hi all!

    Thanks for the advice, I really appreciate it. Yeah, we spoke to him, and he said for the next three months we could pay less, and pay the balance back afterwards... but that seems like picking up debt with no clear way to pay it off, so not so good. Iíve also looked through the contact, but I canít seem to find any language about reasons to terminate the contract. Iíll look again!

    Btw, we are on both sides of this... my family owns a building in NYC, been in the family for like sixty or seventy years. Just got an email from tenant who cannot pay their rent. But with the new 90 day no eviction rule, there doesnít seem to be much to do. So we are getting screwed as a tenant AND as a landlord. First world problems, I suppose, but for gods sake, canít it at least be consistent?

  11. #11
    Join Date
    Feb 2007
    Location
    Washington, D.C.

    Federalism

    Quote Originally Posted by Lord Ash View Post
    Btw, we are on both sides of this... my family owns a building in NYC, been in the family for like sixty or seventy years. Just got an email from tenant who cannot pay their rent. But with the new 90 day no eviction rule, there doesnít seem to be much to do. So we are getting screwed as a tenant AND as a landlord. First world problems, I suppose, but for gods sake, canít it at least be consistent?
    You are having the opportunity to experience the beauty of federalism! Think of it as living a civics lesson.

    Seriously, I do feel for you.

  12. #12
    Quote Originally Posted by Lord Ash View Post
    Hi all!

    Thanks for the advice, I really appreciate it. Yeah, we spoke to him, and he said for the next three months we could pay less, and pay the balance back afterwards... but that seems like picking up debt with no clear way to pay it off, so not so good. Iíve also looked through the contact, but I canít seem to find any language about reasons to terminate the contract. Iíll look again!

    Btw, we are on both sides of this... my family owns a building in NYC, been in the family for like sixty or seventy years. Just got an email from tenant who cannot pay their rent. But with the new 90 day no eviction rule, there doesnít seem to be much to do. So we are getting screwed as a tenant AND as a landlord. First world problems, I suppose, but for gods sake, canít it at least be consistent?
    Where is the inconsistency?

  13. #13
    Quote Originally Posted by Lord Ash View Post
    Hi all!

    Thanks for the advice, I really appreciate it. Yeah, we spoke to him, and he said for the next three months we could pay less, and pay the balance back afterwards... but that seems like picking up debt with no clear way to pay it off, so not so good. Iíve also looked through the contact, but I canít seem to find any language about reasons to terminate the contract. Iíll look again!

    Btw, we are on both sides of this... my family owns a building in NYC, been in the family for like sixty or seventy years. Just got an email from tenant who cannot pay their rent. But with the new 90 day no eviction rule, there doesnít seem to be much to do. So we are getting screwed as a tenant AND as a landlord. First world problems, I suppose, but for gods sake, canít it at least be consistent?
    I wouldnít accept any deal along those lines at this point. Things are too fluid. Keep discussions going, put things in writing and stress that you are working in good faith to figure everything out.

    Have you checked out the SBA loan provisions of the CARES Act? The loans are available to sole proprietors and can be used for things like paying rent and utilities. There is a loan foregiveness component, but I have not delved into the details and do not know if it only applies if the business has employees.

  14. #14
    Quote Originally Posted by Indoor66 View Post
    Where is the inconsistency?
    Oh, just that we have no help as a tenant, but seem to have no power as a landlord either... that’s consistently bad!



    Cato, everyone, thanks for the advice... I just started looking into the loan aspect, yeah... not sure if it can help us yet. Fingers crossed!

  15. #15
    Join Date
    Feb 2007
    Location
    Washington, DC area
    Borrowing? I make no pretense of understanding law, but I do wonder if the therapy biz is its own legal entity.

    -jk

  16. #16
    Sorry Jk, I donít quite understand?

  17. #17
    Join Date
    Feb 2007
    Location
    Washington, DC area
    If the practice is its own legal entity, a bankruptcy would presumably (again, I make no pretense at really understanding law) affect only the practice. The way every commercial real estate project here is its own, separate entity. One goes bust, the rest of the portfolio stands independently.

    Corp risk v personal risk.

    Iíll shut up now and let the lawyers chime in.

    -jk

  18. #18
    Quote Originally Posted by -jk View Post
    If the practice is its own legal entity, a bankruptcy would presumably (again, I make no pretense at really understanding law) affect only the practice. The way every commercial real estate project here is its own, separate entity. One goes bust, the rest of the portfolio stands independently.

    Corp risk v personal risk.

    Iíll shut up now and let the lawyers chime in.

    -jk
    The idea of the SBA loan provisions of the CARES Act is that qualifying business impacted by COVID-19 can take out loans to cover things like payroll, rent, mortgage and utilities. If you meet certain criteria, the loans are forgiven, with no deemed income (usually a forgiven loan is deemed income for tax purposes).

    Sole proprietorships are covered.

    I have not dug into how the qualifying loan amount is calculated or what the terms are to qualify for loan forgiveness, but many of my clients (commercial real estate owners) are considering requiring tenants to try to get all of the aid they can as a condition to getting rent relief.

    I also represent tenants looking into these programs.
    Carolina delenda est

  19. #19
    Join Date
    Feb 2007
    Location
    Washington, DC area
    Quote Originally Posted by cato View Post
    The idea of the SBA loan provisions of the CARES Act is that qualifying business impacted by COVID-19 can take out loans to cover things like payroll, rent, mortgage and utilities. If you meet certain criteria, the loans are forgiven, with no deemed income (usually a forgiven loan is deemed income for tax purposes).

    Sole proprietorships are covered.

    I have not dug into how the qualifying loan amount is calculated or what the terms are to qualify for loan forgiveness, but many of my clients (commercial real estate owners) are considering requiring tenants to try to get all of the aid they can as a condition to getting rent relief.

    I also represent tenants looking into these programs.
    Thanks! I just hope it's managed better than the loan forgiveness program 99% of teachers haven't been getting.

    -jk

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