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Commercial Litigation Landlord Tenant Law Litigation

Frustration-of-Purpose Use In Commercial Leases During the Pandemic

The use of the frustration-of-purpose doctrine to absolve commercial tenants of their obligation to pay rent could signal headwinds for the commercial real estate market — and the economy more generally.

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For the last year, commercial tenants — including some big-name tenants like Hugo Boss, Christian Louboutin and Gap — have been arguing that their rent obligations should be eliminated or reduced during the pandemic under the frustration-of-purpose doctrine. While most courts have rejected these arguments, some recent decisions have come out in tenants’ favor on this point. Some have applauded these latter decisions as providing much needed rent relief to struggling tenants, but these decisions and the use of the frustration-of-purpose doctrine to absolve commercial tenants of their obligation to pay rent could signal headwinds for the commercial real estate market  — and the economy more generally — as demonstrated by some COVID-related New York cases.

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