Although Northern Virginia, Maryland and DC are not yet ready to begin easing COVID-19 restrictions, business leaders are preparing now. What can landlords and tenants do today to survive a challenging second quarter, prepare for reopening, and emerge strong for the rest of 2020? In Part III of OFP’s COVID-19 Commercial Leasing Playbook, we focus on special requirements for retails tenants and their landlords in Washington, DC.
DC retail tenants – Mandatory Rent Payment Plan and Freeze on Rent Increases
New legal requirements will soon be in effect regarding DC retail tenants. On May 5, 2020, the Council of the District of Columbia unanimously passed the “Coronavirus Omnibus Emergency Amendment Act of 2020” (the “Act”), and Mayor Muriel Bowser is expected to sign it into law.
The key provisions of the Act regarding commercial retail tenants include the following:
- The Act applies to every DC commercial retail tenant that:
- has notified the landlord that tenant is unable to pay all or a portion of the rent due as a result of the public health emergency; and
- is not a franchise, unless the franchise is owned by a District resident and operated in the District.
- Rental payment plan programs (“Programs”) are required.
- Landlords of eligible tenants must offer a Program during the time during which the DC Mayor has declared a public health emergency, and ending on the earlier of one year thereafter or when the lease term ends (“Time Period”).
- Landlords must notify eligible tenants of the Program, terms, and application process.
- Each Program must provide eligible tenants with a payment plan for the rent due during the Time Period; waive fees for entering into the Program; permit prepayments, and be in writing. Landlords may not charge tenants a lump sum in excess of the amount required under the Program.
- Program applications will be approved if tenant agrees in writing to make payments according to the Program and submits evidence of financial hardship caused directly or indirectly by the public health emergency, regardless of any existing delinquency or “future inability to make rental payments established prior to the start of the public health emergency.”
- If tenant agrees in writing, a landlord may apply an existing security deposit, last month’s rent or other amount held by landlord to amounts due under the Program.
- No rent increases are permitted during the period of the public health emergency and for 30 days thereafter.
The commercial real estate attorneys of Odin Feldman Pittleman are ready to assist you with your specific leasing matters as you prepare for reopening.
 Note the Act also applies to residential tenants, which are not covered by this article.