On April 1, 2020, Ohio Governor Mike DeWine issued Executive Order 2020-08D to provide commercial real estate owners in Ohio the time and flexibility to rework loan obligations and weather the COVID-19 coronavirus pandemic. This Executive Order provides a much-needed salve for many Ohio commercial real estate owners.
Ohio, like many other states, has issued a Stay at Home Order and ordered all non-essential businesses to close during this pandemic. For many commercial tenants, this has caused revenues to drop or dry up completely, which affects their ability to meet rent obligations to their landlords. For example, the restaurant chain Cheesecake Factory recently announce that it did not intend to make any rent payments for its locations in April. https://www.cbsnews.com/news/cheesecake-factory-april-rent-checks-wont-be-in-the-mail/
Many commercial landlords in Ohio that collectively own billions of dollars of retail property throughout the State are stuck in a precarious situation. Their tenants, many of whom (restaurants, retail establishments, fitness centers, etc.,) were deemed by the State to be non-essential businesses that had to close to protect the public from the spread of a global pandemic. As a result, those tenants will likely not be able to pay rent going forward. This, in turn, would provide a basis for banks and other lenders to declare a default against the landlords under the relevant loan and security documents. A default could mean foreclosure and loss of the property at sheriffs’ sale.
Governor DeWine’s recent Executive Order recognizes this precarious situation and provides a path forward. Governor DeWine’s order directs that lenders “are requested to provide to any commercial real estate borrower with a commercial mortgage loan for a property located in the State of Ohio an opportunity for a forbearance of payments of a term of at least ninety (90) days for said mortgage as a result of a financial hardship due to the COVID-19 pandemic.” Commercial real estate owners in Ohio may thus be entitled to additional time to make their mortgage payments and weather this pandemic.
