Accounting Q&A: My building is closed due to Covid-19, Do I still have to pay rent?
Question:My building is closed due to Covid-19 do I still have to pay rent?
Answer: As a precaution, you should pay your full rent amount when it is due.
Review the Operating Expense section of the lease to see if there are provisions for a vacancy credit for the time you are locked out of your building for those expenses.
Document time and date of notice by the landlord that your building is closed.
Read your lease to see if there are provisions for rent abatement due to extraordinary circumstances.
Rent abatement typically is offered if the landlord needs to close or limit access to the facility for repairs. Even if there is no provision for abatement in your lease, you may want to consider entering negotiations now and see if legal precedent is established in your favor due to Covid-19 closures.
Question:If I am offered rent abatement due to my building being closed does that basically mean ‘free rent’ for the period?
Answer: Not exactly, abatement probably only covers the expense related to your space, you will likely still be responsible for any CAM-related expenses.
Question: Should I be worried about my Line of Credit (LOC) being honored?
Answer: You should look at all of the covenants in your LOC and ensure that you are, and will be, in compliance at least through the next 2 quarters. If you are uncertain about future financial performance, being proactive with your Banker is almost always the best policy. Let your Banker know of possible issues in the future (non-compliance on covenants) and what plans you have ready to mitigate any problems.
Question:My workforce has never been asked to Work From Home (WFH) before, how do I execute this and what are the pitfalls?
Answer: At Optima, we have many team members that work remotely and we have plenty of experience in how to implement effective communications, assign tasks, share files, etc. in a working-remote environment.
Please contact us at 858-283-1234 and one of our consultants can guide you through any questions you may have.
DISCLAIMER – Due to the daily changing environment and guidelines being provided by the government, this information could be outdated. Please contact our office for the latest updates and guidelines. Optima Office is not responsible for any actions taken due to the information provided. The information provided here is for instructional purposes and does not represent legal advice being given by Optima Office.
Critical Accounting Discussion: Tips, Tricks, and Techniques for Creating an Accurate Look Forward