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Who's Responsible for Paying for Health Upgrades in Commercial Buildings?

Jul 28, 2020 by Maurie Backman

Earlier this year when the COVID-19 outbreak took hold in the U.S., much of the country shut down and employees were told to work remotely until it was safe to return to an office building. But the U.S. has largely reopened since those widespread lockdown measures were imposed, and now a lot of people are starting to work in offices again.

But things aren't business as usual. Keeping commercial tenants -- and in this case, their employees who report to work every day -- safe is a more rigorous endeavor. Whereas standard office cleanings may have been perfectly adequate in a pre-COVID-19 world, nowadays, they won't fly. Rather, extra sanitizing is needed to ensure that office buildings and other commercial centers are safe. The question is: Whose financial responsibility is that?

It all boils down to lease terms

Most commercial tenants are entitled to standard cleaning services as part of their lease agreements. That cleaning generally includes services like garbage removal, vacuuming, and dusting. But the intense disinfecting procedures that a lot of buildings are implementing in response to COVID-19 go well above and beyond standard cleanings. Not only does it cost the money to buy added sanitizing supplies, it also requires extra manpower -- labor that somebody needs to pay for. But that "somebody" isn't necessarily a commercial landlord.

If a given lease agreement only includes language that speaks to standard cleaning services, then tenants technically can't demand that their landlords pick up that tab for the sanitizing procedures that will likely need to ensue for a while until the COVID-19 outbreak is better contained. In fact, in some leases, it's pretty clear that extra cleanings are solely a tenant's cost to bear.

But that doesn't mean commercial landlords or property owners shouldn't help pay, either. Right now tenants may be struggling financially, and so hitting them with the cost of sanitizing could constitute a major blow -- one that makes it difficult for them to keep up with rent.

Then there's the goodwill factor to consider. Commercial landlords and management companies don't need bad press, and covering the cost of added cleaning could help avoid vacancies when tenants abandon ship because they feel mistreated, disrespected, or nickeled-and-dimed.

Of course, having to absorb the cost of sanitizing buildings may be a blow to property owners in the coming months. On the other hand, it's easy to argue that a lot of commercial buildings are seeing less foot traffic than ever. The result? Lower utility costs, less maintenance, and fewer repairs. As such, what commercial property owners spend on added cleaning measures they might easily recoup in other ways.

That said, this does beg the question: Will commercial leases be written differently in the future to protect property owners and tenants from gray areas in a repeat scenario? Quite possibly. It'll certainly be something interesting to watch out for.

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