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March 16, 2020

Stroock Special Bulletin

By: Kim Pagotto, Trevor T. Adler, Karen Scanna

As a follow-up to our March 3 general bulletin titled “Steps for Businesses to Consider as Coronavirus Spreads,”  below are a number of specific measures for landlords and tenants to consider during the unfolding COVID-19 pandemic.

While we recognize the possibility of future legal tensions between landlords and tenants as a result of the outbreak, the common goals at this point are prevention, mitigation and communication.

If you have not already:

1. Create an internal task force of critical departments for your internal communications and external communications. This task force should be composed of – at a minimum – human resources, legal, risk management, operations and senior management/executive level (i.e., decision-makers with authority). Create a simplified email address and standing daily internal updates so that all communications happen in real time. If you expect a high volume of communications (e.g., multifamily tenants and employees), consider creating two separate dedicated emails.

2. Designate individuals on the task force to review CDC and local health agency updates and distribute those communications internally. It is not realistic or efficient to have multiple people on your teams trying to sort through all the information. For example, engineers should review the CDC guidelines regarding filtration options, while human resources reviews federal relief options (per below).

3. Update all emergency contact information for your personnel to ensure that any alerts that you are transmitting to your teams are being received by them.

4. Prepare sample internal, client/customer/tenant, and media statements for various likely scenarios and vet them through legal, marketing, risk management and other critical departments.

5. Stress test your technical systems.

6. Determine procedures for mail – incoming and outgoing – IT redundancy, engineering and maintenance, and any other service that requires an individual to be at a particular location. Get teams up to speed and take advantage of any online trainings.

7. Contact cleaning and maintenance vendors directly to determine their policies and protocols.

8. Order spare parts for critical systems in anticipation of possible supply chain disruptions (per below) and any atypical stresses (e.g., increased remote working).

9. Check supply chain and materials to determine if there will likely be gaps now or in the near future and determine what, if any, alternatives are available.

10. Anyone feeling ill should stay home, regardless of confirmed testing. Testing is still being based on criteria from the Centers for Disease Control and Prevention.

11. If a tenant reports that a visitor or employee has tested presumptive positive or positive for COVID-19, local health agencies should be promptly notified. Directions from the local health agencies as to actions to be taken with respect to cleaning and reporting should be strictly followed.

12. Be prepared to issue an alert to other building tenants, residents and other parties with shared facilities (e.g., common parking, common amenities, etc.) if a tenant, visitor or employee has tested presumptive positive or positive for COVID-19. Note that neither the name of the individual (if known) nor an affected company should ever be publicized because of patient privacy and other considerations.

13. Confirm training for all janitorial and engineering staff (particularly at residential properties) of protocols for donning protective gear, sanitizing of tools and equipment, and disposal of gear and possibly exposed materials. Verify any applicable union rules.

14. Consider creating a voluntary, non-specific, informal questionnaire for building visitors, residents, employees and tenants about symptoms, testing, etc. For example: How are you feeling today? Have you had any recent foreign travel? Have you been in close contact with someone or attended any events where there have been confirmed cases of COVID-19 in the past 14 days? These should be asked in a non-discriminatory manner of all categories of personnel (e.g., all residents before engineers enter homes, all visitors before entering the building, all employees before coming to work, etc.), and not solely for those tenants (if any) requesting such measures. The responses cannot be a condition of employment or services – rather, the questionnaire is simply a tool to determine if additional precautionary measures should be taken or access workarounds should be employed.

15. Create a protocol for mail and package deliveries that minimizes exposure for all handlers. For example, in a residential area, having a common mail room increases exposure of all people entering the mail room due to volume. Whereas, having one or two appropriately protected people handle and deliver the mail to individuals, or creating designated time periods for smaller groups of people to collect mail, with increased disinfections in between, may reduce exposure. Consider the operations and physical layout of your building specifically.

16. Eliminate all non-essential service and maintenance calls for a two-week period (e.g., lightbulb changes, window jams, squeaky doors, etc.) to prevent unnecessary exposure. Impose limitations on events and amenity areas (e.g., cafeterias, fitness centers, etc.).

17. Ask your tenants/landlords/partners for their policies and protocols. Keep these filed and updated.

18. Review security deposits, guaranties and percentage rent payment provisions in leases. Force majeure provisions (whether specifically including a pandemic, epidemic or community health emergency) typically expressly carve out non-payment of rent for force majeure causes, and there is presently a moratorium on commercial and residential eviction proceedings in New York State, with other jurisdictions likely to follow suit.

19. Monitor federal and state government relief regularly and determine what your business may be eligible for (e.g., guaranteed paid sick leave for hourly employees, or unemployment benefits for tipped employees, grant programs to cover payroll, etc.).

20. Consider creating a FAQ and update it regularly. Rather than sending multiple bulletins, by posting this FAQ on the company website and message boards, you will have all information in one place where people who are specifically seeking it can readily find it. This should be on the main landing page of your website and include the task force emails and phone numbers.

We have released a number of alerts identifying additional issues to consider:

Navigating Coronavirus: A Guide for REIT General Counsel” (March 13, 2020).

What a General Counsel of a Private Fund Advisor Should Be Doing Today to Manage the Coronavirus Crisis” (March 12, 2020).

The Possible Impact of COVID-19 on the OTC Derivatives Markets” (March 6, 2020).

Will Business Interruption Insurance Provide Coverage for Coronavirus Losses?” (March 6, 2020).

Steps for Businesses to Consider as Coronavirus Spreads” (March 3, 2020)

Coronavirus Task Force Resource Page (Ongoing).

______________________________

For More Information

Kim Pagotto

Trevor T. Adler

Karen Scanna

This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.