Tenants' Rights as Office Buildings Approach Reopening
June 9, 2020
In New York, Governor Andrew Cuomo confirmed that New York City is on track to begin the first stage of its reopening with Phase I on Monday, June 8th. Assuming that occurs as scheduled and without subsequent incident, then Phase II of New York City’s reopening will occur two weeks later, enabling many commercial tenants to return to their offices in a modified capacity. The “new normal” that commercial tenants will be facing as they return to work will be significantly different than anything that they have previously encountered. It will require creativity and imagination on the part of the tenants to adapt their respective physical office spaces and employee work arrangements in order to maintain standards of social distancing and safety guidelines. No tenant’s office set-up or safety standards that existed prior to the COVID-19 pandemic will be sufficient.
In addition, tenants now have to question what safety protocols their landlords may adopt for their buildings, which will impact different aspects of the work environment than those adopted by tenants within their own offices. Many protocols that may be implemented by landlords will make dramatic changes in the way the building had been operated. As landlords communicate their new procedures to their tenants prior to reopening, the tenants may question whether they are necessary or appropriate, and be concerned as to their impact on their respective businesses and employees. Therefore, it is important that tenants carefully review their leases to determine what rights they might have available in providing their own input to their landlords.
What if the landlord’s protocols are considered by a tenant not to be adequate for the safety of its employees and visitors? Many of such protocols would effect the public portions of the building and building systems (such as the how people may congregate in the lobby, use entrances and exits, and populate elevators) which, in most commercial leases, landlords are required to operate and maintain. Can the tenant insist on stronger protocols?
The level to which landlords are required to operate and maintain these crucial areas depends on the terms that were negotiated into the lease. Some leases may require landlords to do so in conformance with applicable legal requirements, while other leases may require landlords to do so in conformance with standards that are applicable to comparable first class office buildings located in the same city. The distinction is significant when dealing with COVID-19 precautionary protocol, because most of the social distancing guidelines and recommendations from the Center for Disease Control and Prevention (the “CDC”) relating to reopening office buildings are not legally required, but rather are prudent precautions and strong guidance. Accordingly, if a landlord under its lease is only required to comply with applicable laws, it would not be strictly required to follow all of the CDC’s guidelines. Alternatively, if a landlord is required to operate its building in conformance with standards of comparable first class office buildings located in the same city, and such comparable office buildings are adopting the CDC’s guidelines (or industry standards, such as BOMA’s guidance for building reopening), then a tenant can make an argument that its landlord is required under the lease to do the same for its building. This also could be applicable for potential building upgrades and improvements which are being made to address concerns from the COVID-19 pandemic, such as upgrading the building’s HVAC filtration system and adding automatic features to doors and points of access throughout the building.
It is possible that instead of being concerned that their landlord is not doing enough to protect their safety as commercial tenants return to their office buildings, some tenants instead will encounter landlords which are implementing protocols that are onerous and unpalatable. For example, a landlord (i) may adopt protocols in its building that unduly and unreasonably limit the number of individuals which a tenant can have in its space at a given time, (ii) may prohibit all visitors to the tenant’s premises, or (iii) may severely restrict the use of the elevators needed to access the tenant’s premises to a crippling degree. The tenant’s rights in this situation also will depend on the terms that were negotiated into the lease. Most commercial leases will provide that tenants have a right to use their respective premises and that the landlords must provide sufficient elevator service and access to the tenant’s premises at all times, except for unavoidable circumstances which are beyond the landlord’s control, or perhaps, subject to reasonable rules and regulations which the landlord may adopt in accordance with the lease.
Unlike the restrictions imposed by the initial emergency orders, the governmental guidance on reopening will be vague enough to leave some of the protocols fully within a landlord’s control. There is a possibility that a landlord’s overly restrictive procedures could constitute a breach of the lease, or constructive eviction, so as to potentially allow a rent abatement if the tenant is unable to use a portion of its premises as a result. In such instances, the determining factor may be whether the landlord’s stringent requirements to address concerns from the COVID-19 pandemic are legally required or consistent with comparable buildings, or only self-imposed.
The details of landlords’ action plans are still being formulated as they prepare to reopen their office buildings; however, it is clear that the implementation of those plans will require advance conversations and coordination between those landlords and their tenants. Like any untested plan, there ultimately will be room for improvement, whether because the landlords are not taking enough prudent precautions or because the landlords are being too restrictive. In either instance, though, the tenant’s rights will be dependent on the specific terms of its lease. Accordingly, as tenants begin to plan for their eventual reopening, they should be reviewing the rights under their leases to ensure that they are prepared for whatever they may ultimately encounter when they begin dealing with the specifics with their landlords.