Medical Professionals: COVID-19 and your Commercial Lease
In Washington State, Governor Jay Inslee has halted all non-emergency services and elective procedures for the next 8 weeks forcing most medical offices to close during this time (hospitals, surgery centers, dental offices, etc.)
Rent is still due!
The obligation to make a rent payment is not automatically stopped because your business has been forced to close! Here are some ideas of what you can try:
Talk to your Landlord.
Engage with your landlord right away. It may be news to them that your office has been forced to close, leaving you with little to no ability to produce revenue. They might in a situation to help, though this is a negotiation not a guarantee. Ask your landlord if they would be willing to waive or reduce your rent, a 90-day deferral of rent could be option, or just pay the CAM/NNN – anything can help. Offer to make it up over time once the doors are back open and you’re treating patients. Remember the landlord may be having their own financial hardships, but they do have an interest in you being able to pay the rent for years to come.
Check-in with your Insurance Agent.
Some insurance policies have coverage for unique circumstances in the case that you are not able to run your business. This may help with covering rents and loss of wages.
I am not an attorney, nor is this an attempt to provide legal advice. So, check-in and consult your attorney, make sure they specialize in Commercial Real Estate Law with a focus on Medical leases and contracts. On rare occasions, your lease may include Force Majeure, which could offer relief in unforeseeable circumstances that prevent someone from fulfilling a contract, but this is unlikely. After a quick review of a traditional WA State Commercial Brokers Association Lease, there was no Force Majeure clause within the document.
Ask your attorney about Common Law which is prevalent in many states. This may address the impossibility to perform and make an income, it doesn’t automatically relieve you from your rent obligation, but the fact that you are forced to perform only emergency procedures in WA State may allow for an avenue for relief.
Banks across the nation are offering short term Small Business Loans at low rates as a method for giving small businesses financial aid. First, check-in with specific banks that focus on loans for Medical providers. Small Business Loans are available now. Some larger national banks may offer other loan programs or allow for deferred payments for the time being. Now may also be a good time to refinance your practice loan into a lower rate loan and saving you money.
If you need help getting in touch with a qualified attorney, banker, want to talk about your specific circumstances and ideas, or just want to tell me I am wrong, please contact me at Steve@omni-pg.com.
Connect with Steve on LinkedIn: https://www.linkedin.com/in/steve-kikikis-378b8697/