What are a Landlord's Obligations to its Tenants During the COVID-19 Pandemic?
By Scott I. Zucker
As we move into the fifth month of the pandemic there remain conflicting signs of our future. Infections are rising, deaths are mounting while research institutes and pharmaceutical companies race to find a cure through a vaccine. In the interim, we seek to find normalcy with working from home, creating virtual classrooms for our children, wearing masks while shopping, and enjoying outside-only dining at restaurants.
For those invested and working in the self-storage sector of the industry, while we may have learned that our business was "essential" (at least under some definitions), the pandemic has left us with anxious tenants, un-visited facilities, increasing rent defaults and a new list of maintenance and safety protocols. COVID-19 has also left us with certain new and unique questions about the obligations of being a landlord.
One of the first issues is how to handle late fees and the enforcement of the owner's lien due to a rent default. Significantly, with the imposition of multiple ambiguous and inconsistent statewide and municipal orders, the pandemic has led to either no late fees and no lien sales being imposed by operators for the last five months or the sporadic and cautious return of the owner's enforcement of its contractual and statutory rights in response to defaulting tenants. Guidance on this issue has been difficult, since none of the laws that seek to protect struggling residential tenants or even small businesses truly intend to forgive a tenant's obligation to pay its rent or forestall a landlord from its right to be paid. But many hastily drafted executive orders, court orders and even state laws have resulted in confusing and incomplete directives as to the right that a self-storage operator may have when it comes to enforcing its contractual entitlement to late fees and, more importantly, its statutory self-help remedy of foreclosing on its lien over its tenant's stored goods. At this juncture, the only appropriate answer to the question of "Can I sell?" would be to thoroughly review and consider any statewide orders or laws that have been legislated as well as any orders or laws that may have been issued by local municipalities where the facility is located. As an interim measure, it is widely recommended that all lien notices be updated to include certain COVID-19 language to allow tenants to respond to a facility's default notice. The language might read something like: "If you are unable to pay your account in full because you were financially impacted by the COVID-19 Pandemic, please contact us to discuss your situation. Please note that in order to assist you, it will be necessary for you to provide us with medical confirmation if you or a family member had the virus or employment records if you became unemployed."
The other issue that a self-storage landlord needs to consider is the risk of virus contact at the facility. Although the potential liability for asserting that a virus contact arose at a facility (as compared to a grocery store or even at home though another family member) is truly small, there is still a burden imposed on a self-storage operator, like all business owners, to ensure their property is, through ordinary care, as safe as possible. This is why operators are encouraged to develop cleaning protocols at their facilities where doors, handles, pin-pads and other surfaces are regularly cleaned and the operator creates an ongoing maintenance log to document these good faith, regular efforts at sanitation. Included in this ongoing documentation is the tracking and notice to employees and tenants of any recent visitors to the property that have tested as positive for the virus. Although there appears to be no law to require it, if that is the case and the facility is notified, it would be recommended that the facility post a notice acknowledging that the facility received notice that an infected person was on the premises and, since notification, the facility (and the areas where the person traveled on the property) have been sanitized for cleanliness. The decision to notify as compared to not notify may seem burdensome, but the benefit of making that disclosure (thereby permitting the tenant to make its own decision to enter) may ultimately create the difference between a successful or unsuccessful tenant injury claim.
Stay Safe and Happy Storing!