May 14th, 2020

Lease & Loan Negotiations

These tips were shared by the West Colfax Business Improvement District. See their Covid-19 Resource Page here

A number of lenders are entertaining loan deferrals, as are landlords re-negotiating leases with short term abatements or concessions in return for an extended term, for example.

Depending on the circumstances, some options include:

Similarly, property owners and businesses are negotiating with their banks for loan modifications, including:

Be prepared to demonstrate to your bank how you are being affected by current events and what you’ve done to reduce expenses through salary reductions, staff layoffs, landlord negotiations, vendor and supplier accommodations.

How to navigate office leases during COVID-19

There is an opportunity to be proactive and limit your financial exposure by negotiating with your landlord

ColoradoBIZ Magazine



Read full article here

As local health and government officials continue to implement new guidelines to help reduce the spread of COVID-19 in Colorado, thousands of companies are trying to settle into a new normal for their workplace operations. As food and beverage and retail companies adjust to new methods of delivering their services and products to consumers, office tenants are experiencing a huge shift towards working from home for their employees.

Navigating this new reality raises serious questions: Will we make it through this? Are my employees OK? What does this mean for productivity? How will this impact my team’s culture? How do I continue to motivate? What are our opportunities for business growth?

And one more big question: What do I do with my office lease during the COVID-19 outbreak?

As non-essential businesses across the state are closing their doors following the governor’s stay at home order, office spaces are emptying out. With real estate being one of the top expenses for any company, many business leaders are wondering what their options are.

While there are very limited legal options you can exercise during this time, there is an opportunity to be proactive and limit your financial exposure by negotiating with your landlord.

Assess your current situation

How you approach this conversation with your landlord will depend on your current status considering the evolving situation. It’s important to look at how your company is responding and adapting now, as well as what your needs will be in the coming three, six or nine months. Be prepared to document the economic impact that this situation has had or is projected to have on your business, as well as any additional measures you’ve taken to mitigate your financial risk.

Read your lease agreement

Unfortunately, there is most likely no protection for this type of scenario included in your lease agreement, even if there is force majeure language. If you have an attorney, have them review and provide insight into your legal options (which, per our current understanding, are extremely limited).

Name your best-case scenario

While this is a new situation for everyone, decide what your best-case scenario would be for your company in terms of your office lease. Then, work with a trusted broker to help craft what those terms would be to present a clear, concise proposal to your landlord. Try to secure a deal that will not only provide you with the short-term relief you need, but also set you up to weather the duration of the crisis. Having to go back to your landlord multiple times over the coming months will become less productive and make results more difficult to achieve.

Negotiate with your landlord

Landlords are particularly busy during this time making sure their buildings are safe for their tenants and trying to figure out the ripple effect of COVID-19 on their properties. Some landlords may be willing to work with their tenants, while others may not. In the Denver metro area, there are multiple examples of landlords already offering rent abatement or reductions in payments.


As this situation continues to unfold, many landlords and lenders are recognizing a need to work together to keep businesses open and the economy running as best as possible. While there are multiple factors that will dictate how office leases can be amended, being proactive is the single most important step any tenant can take.


Andy Cullen offers more than 17 years of experience in commercial real estate brokerage. He leads Tributary Real Estate’s brokerage service division, setting company strategy and supporting the success of the brokerage team in delivering positive results for clients through a personalized service model.



Colorado Enterprise Fund’s Guide to Lease Payment Negotiations During COVID-19

View and print PDF here

power has shifted

Let’s face it. Small business tenants historically have limited bargaining power when
negotiating with landlords. This resource is to prepare you for a difficult discussion with your
landlord. With some strategy and planning, your discussion may go better than expected.

This guide will help you to lead a positive discussion in which you say:

1. You intend to keep your business going. Maybe that will be to a limited degree right
now, but back to usual after this period of required social distancing is over.

2. You will pay some amount (even if small) each month on your lease.
When your business started, it probably had no ownership of property and a great need for
cash. Landlords, on the other hand, being more established over a longer period of time,
have some dollars of ownership, or equity. And they may have a loan on the property, and
the lease payments of the tenants probably more than cover the landlord’s payments and
other expenses.

In the great recovery after 2008, landlords have been holding high ground when a business
tenant could not make payments. You could be evicted and quickly replaced with another
small business vying for the same space.

But, here comes the novel Coronavirus pandemic of 2020. It has changed everything
between your landlord and you. Now, when your landlord contemplates about a late or
missed payment, there is no clear sight of another tenant waiting in line to take your place.

Your missed payment may be accompanied by several missed payments. And your landlord
may be worried right now about his/her own mortgage payments for the building you are
renting space in.

count your position’s strengths

Have you taken all possible pains to retain your customers? Maybe you have done steps in
CEF Guide to Business Continuity during COVID-19. You have made your space and products
as safe as possible for your customers and employees. You have publicized on social media
your measures to prevent the transmittal of disease.

On the other hand, city or state authorities may have ordered your business—thriving just a
month ago—to close your doors, to keep customers from passing COVOD-19 while enjoying

your service.
Considering both your efforts to stay open and the forces working against you, the landlord
may see you as the best tenant that can’t pay.
know your lease

Read it! The truth behind the difficult legal language is already on the mind of your landlord.
Your first challenge is to understand your landlord’s point of view.

Rights are Slanted in favor of your Landlord: Realize most powers and the rights are not yours.

Find the sections that say:
1. What happens when your payment is late.
2. How long you have to make up a late payment.
3. When the landlord has a right to evict you.
4. What happens to your equipment and furniture if you are evicted.
Find the section labeled “force majeure.” This term means forces beyond anyone’s ability to
control, like a flood or earthquake. “Act of God” is a synonym. Much debate is happening
right now whether a pandemic qualifies as a “force majeure.” The common sense answer is
that it may very well qualify as such.

Most leases excuse the landlord for not performing their side of the bargain if there is a “force
majeure” but say little about excusing the tenant. Most say a “force majeure” does not ever
excuse the tenant from making a lease payment on time. Find out exactly what rights, if any,
you have under a “force majeure” as outlined in the terms and conditions of your lease
agreement. Consult also with a real estate attorney.

Find the section about “abandonment” or “vacation” of the leased space. It probably says if
you don’t keep your doors open, the landlord can evict you. Of course, this section will not
speak to being forced to close your doors because of an order from the city or state.

Regardless, realize your landlord’s interest is that their property doesn’t look like it has been

negotiate not from weakness but parity

Plan to talk with your landlord over Facetime or Skype. The less distant and more personal the
communication, the easier to take down walls preventing agreement.

Realize when you plan this talk you do have some power. Besides the points about your
bargaining power above, your plans to keep your business going, after the pandemic, speaks
volumes about your good character.

Plan your words:
1. Recognize the humanity of your landlord, who has been going through a lot, just like
you. Say so.
2. Explain your limited business activity right now and over the next month or so, even if
it’s not much. If no activity, say so. Be as specific as you can.
3. If no business activity (e.g. the city has closed down your bar) make the commitment
that you or a member of your management team will go into the premises each day,
to make sure the heat and air are still working and that the space is secure and safe.
4. Explain that you plan to resume normal business activities after conditions improve. Be
emphatic about that.
5. State that you recognize the pandemic is a “force majeure,” as discussed in the lease.
If it’s what your lease states, say you understand the lease requires you to pay anyway.
6. If you can, say you will be making partial lease payments. Even if you can pay only
$100, partial payments show your commitment. State an exact amount even if you
realize the figure may change later.
7. Say you will make up any missed dollars after conditions improve.

NOTE: Do not say you are in default of your lease. Those words could be used against you.
One way people make up missed payments is with higher payments starting at some future
time. Another way is large cash payments later on, although it’s usually hard for small
businesses to generate this kind of cash. If your landlord wants interest on dollars not paid,
agree with any reasonable proposal.

Follow up in writing: You take control when you send a carefully worded email recounting
the discussion. Remember, do not say you are default of your lease.

Immediately afterwards, put the words of the email in a letter. Print it and send it by
registered mail so you get a receipt that your landlord has received it. Remember to use
words fairly representing your landlord’s point of view. Be fair to yourself as well.

Engage a real estate attorney to write an addendum to the lease, expressing the informal
agreement in a formal fashion. This needs to happen, but it doesn’t have to happen today.