Coronavirus Impact Updates

Landlords Accepting Partial Rent or Allowing a Tenant to Skip Rent Must Send Written Notice of Enforcement of Terms

Coronavirus

On March 1, 2021, the Georgia Court of Appeals issued a decision impacting both residential and commercial landlords/property owners. The ruling has a potentially broad impact, and is especially noteworthy for landlords in the current pandemic environment. Specifically, in The Hatchett Firm, P.C. et al. v. Atlanta ME-006 Life Financial Group, Inc., the tenant was allowed to partially pay rent for ten (10) months and then stopped paying rent for six (6) months. After over fifteen (15) months of an adjustment of rent payments, which was accepted by the landlord, the landlord provided notice to the tenant demanding rent and compliance with the lease. The Georgia Court of Appeals held that by repeatedly accepting less rent than as required by the lease or no rent at all, the door was opened to a “de facto” new agreement having been created between the parties and that the parties had mutually agreed to suspend the terms of the written lease. Further, the Georgia Court of Appeals noted that while the lease contained an anti-waiver clause, the anti-waiver clause could not be enforced due to the repeated acceptance of less rent or no rent.

Action Items

While the new Georgia Court of Appeals decision applies to a unique case with egregious deviations from making rental payments pursuant to the lease, a new precedent has been established requiring landlords/owners and/or property management companies who accept partial rent payments or allow tenants to skip any rental payments to promptly send notice to a tenant/resident in writing stating the landlord/owner intends to enforce the exact terms of the lease as written going forward. If this notice is not provided, the door may be opened for a tenant to argue a change in the terms of the lease.

Further, notice to enforce the terms of a lease is likely even more critical during the ongoing pandemic. Many landlords/owners and/or property managers are accepting partial rent (possibly pursuant to the CDC Eviction Moratorium for nonpayment of rent) or waiving rental payments to assist and work with tenants during this challenging time. Landlords/owners and/or property managers must ensure that any rent concessions during these unique times are not a “hand shake” but are documented by an amendment (preferably) or written notice to ensure the existing terms of the lease can be enforced going forward.

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