To Pay or Not to Pay
Wednesday Apr 01st, 2020
To Pay or Not to Pay
This has been the question that has plagued many Tenants and Landlords since the start of the pandemic. The deluge of opinions that have flooded social media and the news channels up to this point have been plentiful. Given the upheaval this virus has caused medically, socially and financially thus far, it is safe to assume business owners and Tenants would be questioning whether or not they would be required to make their rental payments come April 1st.
As a Broker, I had a pretty good idea of what would need to happen however I could not be sure whether anyone would have wanted to hear what I had to say as it was not in the favour of tenants, be they commercial or residential.
As most leases do not have provisions for extremely rare events such as a global pandemic, most Landlords are in a bit of an odd position despite having the need to make their mortgage payments on time and pay their property taxes and utilities. Despite what is being said in the media, not every mortgagor qualifies for a deferral, commercial or residential. I truly sympathize with Landlords as well as Tenants whose businesses have come to a grinding halt as well as those residential Tenants who are unable to work. Nothing could be worse.
Despite all the hubbub about paying or not and what is right and what is not, I am just going to reiterate the consensus that was reached by a group of experienced real estate investors from coast to coast on a 3.5hr long webinar last week.
I will not drone on about what he/she said, the gist of the discussion was that these are unprecedented times and that at the end of the day it is crucial to get a dialogue going with your Landlord immediately be they commercial or residential. In essence, a compromise has to be reached which means that either a rental deferral is worked out for a period of a couple of months or partial payments must be made. For a Commercial Tenant this may mean just paying taxes and utilities until the situation subsides and for a Residential Tenant, this may mean a total or partial deferral.
I have been on both sides of the coin and I totally understand the huge amounts of stress everyone is experiencing now and sincerely hope that both parties reach a reasonable understanding because it’s not like some people don’t want to pay, they just may not be able to right now. You can’t get blood from a stone. Stay safe everyone, I know everyone is freaking out at home whether they have work or not. None of us have experienced anything like this, I figured somehow in my pandemic haze that having survived 2 awful recessions and my business partner, 3 of them, that some how we were prepared?! Again, stay safe, keep your distance and be kind to one and another.