How to protect your commercial real estate during mandatory shut downs

As COVID-19 continues to spread, so does its impact on the commercial real estate industry. Managing property is no easy feat even during ordinary times, and it’s even more difficult during a global pandemic.

Commercial real estate owners are responsible for an endless task list–from making sure people are following social distancing guidelines to abiding by laws and regulations imposed by state or federal authorities.

In truth, these laws exist to protect people, but they are also draining cash from the economy at incredible rates. As such, commercial property owners must continue keeping a close eye on their properties from both economic and safety-oriented perspectives.

To get off to a good start, here are four ways you can protect your property during a mandatory shut down:

1. Hire a Property Manager

Make sure your property manager is thoroughly examining the exterior of the buildings as he or she visits the premises. Check the roof, doors, and exterior walls to ensure there is no damage or vandalism. In addition, property managers would not only monitor the premises – they would also perform regular upkeep and maintenance of the property.

Even if your offices, stores, or warehouses are vacant, a property manager can keep a close eye on them. But regardless of whether it’s a property manager or someone else, have someone keep an eye on your property every day. A property manager could help you hire a security company to protect your property 24-7. Although this would be a cost, it would guarantee the safety of your investments. They can also ensure that no one is trespassing or taking up residence there without permission.

2. Check Up on Your Systems

The last thing you need to deal with is a system failure in a vacant building. HVAC system malfunctions and water leaks that you didn’t know about can end up costing you thousands of dollars in repairs. Make sure your major systems stay healthy with regular checkups.

When you close your commercial space in response to social distancing orders or similar mandates, you often can’t just lock-it-and-leave-it. Your HVAC system, which filters and circulates air, is one of your building’s most important tools. By itself, running your HVAC system is not enough to protect your tenants or employees from COVID-19. However, when used along with other best practices recommended by the Centers for Disease Control and Prevention, operating the HVAC system can be part of a plan to protect yourself and those around you.

If you have an HVAC system, there are things you can do to help keep your property safe during a shutdown. The first is to run the system fan for longer times, or continuously, as HVAC systems filter the air only when the fan is running. Many systems can be set to run the fan even when no heating or cooling is taking place.

It is important for your property manager to continue checking that the filter is correctly in place so the mechanism functions properly. You may even consider upgrading the filter to a higher efficiency filter or the highest-rated filter that your system can accommodate. Whatever you choose, it is most important that the system is running efficiently and correctly.

3. Work With Your Tenants

Landlords and tenants should be making every effort to work together constructively now more than ever. Both parties are facing potential financial challenges, and the fundamental end goals are the same: to make sure the tenant is safe and comfortable and the landlord receives rent and any other payments as due. Landlords should maintain dialogue with tenants in order to maintain relationships but must exercise caution in responding to tenant requests for accommodations. Maintaining consistency here is key.

In the state of Colorado, Governor Polis issued a moratorium limiting evictions during the COVID-19 crisis and adopted guidelines based on CDC recommendations. The expiration date for the longer notice periods and eviction restrictions is unknown at this time. To further complicate matters, the Supreme Court of Colorado Court has delegated authority to interpret executive orders to individual judicial district courts in those cases that are deemed nonessential matters, which include evictions.

In addition, it is important to continue making necessary repairs when it comes to your properties. It is important to communicate with your tenant when and how repairs will be completed to abide by social distancing guidelines. If you have to visit the property, you should attempt to keep at least six feet away from your tenants at all times and wear protective clothing such as gloves and masks. Talk to your tenants beforehand to establish if anyone has been in contact with someone with coronavirus or if anyone is self-isolating. The safety of all involved is very important. It may be best to have your tenant get tested before you attempt to make repairs in this case, or you can safely provide the necessary tools and instructions to your tenant if it is a repair they can complete themselves.

4. Review Your Leases

Having a licensed commercial real estate attorney review your leases can mitigate any risk of loss due to the pandemic. Have an attorney review your commercial real estate policies for any notification requirements to ensure that you can stay on-track with requirements. Also have your lawyer look over your commercial insurance policies to get an idea of what losses may be covered.

For example, you should know whether your commercial lease addresses force majeure. This concept arises when unforeseeable circumstances prevent someone from fulfilling a contract. These clauses may apply to forced closure due to governmental requirements beyond the control of the landlord. Landlords should be careful to comply with, and consult an attorney on, the notice and other procedural steps that may be required under the applicable lease in the event of

this kind of occurrence. Again, in Colorado, these situations are to differ by judicial district court due to the ongoing pandemic.

While it is not an exhaustive list, this is an excellent guide to begin protecting your property during COVID-19 and beyond. For more information, reach out to a licensed attorney who specializes in commercial real estate issues.

 Robert Fischer is an attorney at the Fischer Law Office. With two decades of experience, Fischer is one of Colorado’s leading commercial real estate attorneys. He provides a full range of transactional legal services for professionals looking to buy, sell or lease commercial real estate.