Reviewing lease agreements in the time of Covid-19
by Marketing Team | April 26, 2020
The Covid-19 epidemic is having a dramatic impact on many aspects of our lives. The business aspect is a primary concern as it has important downfalls and consequences that are likely to remain after the end of the pandemic.
The lockdown measures adopted by many states involve a complete closure of many commercial premises. This entails that it’s necessary to review the leasehold agreement to understand the rights and the obligations of each party.
If the number of agreements is large, like in the case of landlords with a large property portfolio, or in the case of large retailers that rent commercial spaces, reviewing and understanding agreements can be a daunting task.
How can Covid-19 impact your lease agreement?
There are a number of clauses that can come into play during the Covid-19 crisis:
- Keep open covenant – a common clause in commercial contracts, it basically forces the tenant to keep the premises open. Although difficult to enforce, provided the closure that has been imposed, it’s a clause worth monitoring
- Hardship clauses – they provide that the agreement can be renegotiated in the event of external circumstances which create an economic imbalance between the parties.
- Force majeure clauses – as many businesses are struggling to fulfil their obligations, can these be suspended under a force majeure provision?
- Unoccupied premises – most leases contain an obligation for tenants not to leave the premises unoccupied for more than a certain number of days without notice to the landlord.
- Rent free period-rental holiday clauses – worth checking if they have been negotiated in the lease, as they allow the tenant not to pay rent under some circumstances
- Deep cleaning – it may become necessary to sanitize the premises – it may be worth checking if it’s a case that falls under the service fees provision
But how can you review and find relevant clauses at scale?
Cognitiv+ Lease Abstraction technology can be a gamechanger in extracting obligations and key clauses from leases. The final product is an easily navigable Excel or Word Doc, which includes the most relevant legal and financial information included in the lease agreement, together with a clear breakdown of each parties’ obligations.
- Automatic analysis of obligations of the lessor and lessee including prohibitions, discretions and deliverables
- Automatic extraction of key leasehold clauses
- Presented in a filterable excel spreadsheet or a Microsoft word summary
- Cognitiv+ takes your lease and creates an identical digital format enabling you to capture information in its original format retaining legal integrity
- Lease extraction is notoriously difficult so the system will continue to improve and find more as Cognitiv+ uses the latest artificial intelligence techniques
- Take extracts from the lease and merge them into a letter, report or notice
- Open up key information for your estate managers
- Have a full digital elastic search of all your leases – pay one fixed subscription for the initial findings
- Test 100 leases free of charge for 30 days to show immediate return on investment before committing
- Build your own models to find key pieces of information quickly and cost effectively
Cognitiv+ breaks down the lease into clauses and sections enabling you to use these for many purposes and quickly find new details.