The COVID-19 pandemic has caused many challenges for small and large business owners alike. With the closing of business for several months or even indefinitely, many are finding it incredibly difficult to stay in operation without a steady stream of income. The same can be said for commercial landlords, who rely on their tenants to make rent payments on time. However, many commercial landlords have filed lawsuits against their larger retailer clients and the parent companies of those large retailers, as those tenants are choosing to not make rent payments despite being solvent brand name operations.
Commercial Landlord Lawsuits Filed Against Major Retailers
Landlords of commercial properties have found themselves between a rock and a hard place during the ongoing pandemic. While many small business owners continue to struggle to make rent payments, landlords still have to run their own businesses as well, which includes continuing to collect these rent payments on time in order to service debt or cash flow obligations. Notably, it’s not just small businesses not paying their rent, but also well known major retailers.
Recently, CEC Entertainment – the Texas-based parent company of restaurants such as Chuck E. Cheese and Peter Piper Pizza – declared bankruptcy. Many Chuck E. Cheese locations are also embroiled in litigation filed by over 50 landlords for unpaid rent. This trend will likely continue to play out with other major commercial restaurant and retail chains in the coming months.
Mall operator CBL Properties is among the landlords pursuing legal action against CEC Entertainment for unpaid rent. The shopping center recently filed an emergency motion demanding CEC Entertainment pay all post-petition rent and any related charges listed under the terms of its lease agreement. According to court documents, CEC Entertainment owes CBL roughly $74,000 in unpaid rent for July, August, and September alone. The property owner has stated that it continued to provide services for CEC Entertainment without receiving compensation for the use of the space.
What Commercial Landlords Can Do
Many of the leases once held by commercial tenants are also likely to not be renewed. Because of this, it’s important for commercial landlords to have a plan in place in order to keep operations afloat.
While larger retailers should still make timely rent payments, landlords should take the time to discuss plans for rent payments with smaller business operations that don’t have the same financial wherewithal as larger brand names. By making the effort to be more flexible in the short term with smaller operations, landlords will not only be able to generate some income (albeit, reduced), but they can also help small businesses avoid closure. This approach can benefit both landlords and tenants.
Even though negotiations can likely be held with smaller scale tenants, compromises with larger tenants who may pursue bankruptcy in order to avoid paying rent will be more difficult. Nonpayment will likely require legal action be taken in order for landlords to obtain these payments from large commercial tenants that try to avoid making them altogether. In these instances it is best for commercial landlords to consult with an experienced commercial property attorney.
Houston Commercial Property Damage Attorneys
When large-scale retailers or brand name corporations make the decision to attempt to freeze, delay, or simply not make rent payments, this ultimately leaves landlords without the money they rely on to continue their own businesses. At Raizner Law, we understand just how complex lease disputes can become. We’ve worked with business owners and landlords to protect their livelihoods from such disputes. If a large commercial tenant owes you unpaid rent, contact the attorneys at Raizner Law today to discussion commercial landlord lawsuits and to see how we can best assist you.