Forbearance Agreement Commercial Lease

Before you begin your negotiations on a commercial lease during COVID-19, contact the lawyers at Crawford & Von Keller, LLC to fully understand the practical and financial issues of a leasing agreement. A forbearance agreement is an agreement between a lessor and a tenant in which the lessor agrees to change the necessary rents as described in the rental agreement and also agrees to waive or refrain from recourse against a tenant in exchange for certain guarantees from the tenant for non-payment of rent. A forbearance contract is usually a contract signed separately by both parties to the lease. The forbearance contract benefits the tenant by granting him a temporary or permanent reduction of the rent, a temporary waiver of the rent or a deferral of the total or partial rent. In addition, the lessor will agree not to seek the remedies to which he is entitled under the rental agreement as long as the tenant meets all the conditions of the Forbearance contract. One of the ways to tackle this problem is a forbearance agreement. A forbearance contract is a separate contract from the lease in which the lessor undertakes to modify the tenant`s rental plan and temporarily waive his rights of the lease in exchange for a guarantee and / or other consideration of the tenant. A forbearance agreement can be entered into either before or after a tenant`s default. The Forbearance agreement should in no way nullify the remedies available to the lessor under the rental agreement, by law or by the right of completion. In addition to the remedies already provided for in the rental agreement, the lessor may assert the right to accelerate the deferred rent in the event of a delay by the tenant (as described above) and to terminate the lease if the tenant does not pay the deferred rent on time. A lessor might also consider obtaining a pledge right over the tenant`s personal property (which may include claims, equipment, personal property, etc.) after the UZK. If the premises are located in a state that does not provide for legal instructions from the lessor on the tenant`s personal property, it may be necessary to include in the leniency agreement a provision on the security interests of the UCC and to file a UCC-1 funding declaration with the relevant Secretary of State in order to perfect this security interest. Note, however, that even if the tenant voluntarily grants a guarantee interest for his or her personal property, such a subsidy may be invalid as a fraudulent preference or transfer in the event of bankruptcy.

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