Recent Commercial Eviction Cases: Force Majeure, Co-Tenancy, Quiet Enjoyment, Frustration of Purpose

Description

Since March 2020, the COVID-19 pandemic has caused substantial economic distress worldwide, particularly to U.S. landlords, small and large. Estimates show that more than 10 million renters are behind on payments, more than triple an average year. Federal, state, and local eviction moratoria have created an untenable situation for landlords unable to pay their own mortgages, maintenance, payroll, utilities, and other obligations. Recently, the courts are issuing decisions on the enforceability of the moratoria and landlords' rights under the contract and statutory law.

Counsel for both landlords and tenants should know the courts' rulings, particularly on common tenant defenses. Many cases dispute the validity of the eviction moratoria. Major New York, Florida, and California cases found that the doctrine of impossibility and frustration of purpose defenses were inconsistent with lease terms explicitly addressing the risk of a tenant's inability to operate. Other decisions, including a New York Supreme Court case, have found that frustration of purpose is a valid defense because the COVID-19 pandemic was not foreseeable.

With the uncertainty of rulings on tenant defenses and landlord claims, counsel and clients should consider alternatives beyond the courts to resolve defaulted leases. Utilizing various options, from filing claims on a tenant's business interruption insurance to developing work-out plans that address both tenant and landlord needs, should be examined.

Listen as our expert panel addresses the current decisions from commercial eviction cases and the successful defenses that have been presented. The panel will also advise on alternative resolutions to defaulted leases.