Paul Peter Nicolai
Pandemic Closing does not Breach Lease
Updated: Apr 12, 2021
A commercial landlord sued a tenant that stopped operating a café and paying rent following a statewide order disallowing on-premises consumption of food and beverages. The court said that the closing and non-payment was not a breach of the lease as long as the order was in effect and granted the tenant partial summary judgment.
Why This Is Important…
This is one of the first cases to decide what effect COVID-19 has on commercial leases.
This Massachusetts court ruled that because the lease specifically said the property could only be operated as a specific kind of cafe and operating a cafe was illegal under the statewide order, a common law doctrine called frustration of purpose applied.
This meant closing the cafe and not paying rent while the statewide order was in effect was not a breach of the lease.
Whether this doctrine would apply to a commercial lease that had broader use terms is unknown.