Post-COVID Commercial Lease Disputes: Legal Safeguards for Tenants and Landlords in 2025

The commercial real estate world was reshaped in seismic ways by the COVID-19 pandemic. During lockdowns, many businesses shut down or downsized, leaving tenants as well as landlords to grapple with tough decisions about how to handle rent payments, lease terms and ongoing obligations.

The ripple effects of those events are so far-reaching that the landscape on which commercial leases are negotiated and enforced is anything but clear in 2025. As business begins to normalise, new precedents and prevention have been established for Post-COVID Commercial Lease Disputes.

This article examines how commercial leases have already evolved, what still poses challenges and which legal protections are now entering the mainstream.

How COVID-19 Changed Commercial Leasing Forever

Before the pandemic, commercial leases were typically inflexible agreements that had little room for negotiation once signed. Rent obligations seldom had exceptions, and force majeure seemed such a long shot that it was tough to imagine when they might matter. But national lockdowns and operational constraints exposed crucial contract vulnerabilities.

Lingering Issues in 2025:

The pandemic is over, but many long-term effects have not gone away:

• Businesses are still confronting unpredictable operational challenges, such as disruptions in the supply chains and fluctuating consumer demand.
• Landlords themselves are increasingly skittish after waves of tenant defaults.
• Legal uncertainty, brought about by government emergency policies, frames the way court decisions are still being made.

Such realities continue to animate discussions on who should be responsible for rent debts both during and after times of hardship.

Common Post-COVID Commercial Lease Disputes

Even in normal times, there was always some risk of a disagreement between commercial landlords and tenants, but the pandemic dramatically expanded the kinds of disputes that rise to legal review.

 

Rent Non-Payment and Arrears

And many tenants accumulated large back rent during shutdowns. Some got settlement offers, others faced eviction or lawsuits. Disputes over liability for debts incurred in the pandemic era. Payments while disputes continue in 2025 are still common, as parties argue over who deserves the credit. Early Lease Termination and Abandonment

Permanent closures meant that many businesses had no legal justification to break their leases. This resulted in fights over termination fees and damage claims.

Force Majeure and Impracticability

Suddenly, these formerly obscure legal doctrines were the subject of myriad legal actions:

• Force Majeure: if closings by the government legally relieved tenants of rent obligations.
• Frustration of Purpose: if the purpose behind the lease has become impossible.

Courts issued conflicting decisions, with the result that uncertainty continues to impact lease drafting today.

Business Interruption Insurance Claims

Insurance was what many tenants assumed would cover the cost of pandemic losses. Most policies didn’t cover such claims, and lawsuits remain pending in some of those jurisdictions.

Co-Tenancy and Operational Requirements

Some retail centres have lease covenants that dictate that stores remain open until a certain date. Closures sparked controversy over whether tenants could lower rent or break leases.

These disputes spawned a legal universe of precedents that continue to shape today’s agreements.

Lessons Learned from Legal Battles

Years of talk, arbitration and litigation proved that commercial leases must do a better job of anticipating unforeseen disruptions. One big takeaway is that leaving anything in a grey area helps no one. The two sides currently prioritise clarity on the following issues:

• Emergency rent adjustments
• Performance-relieving lengths can get away with
• Obligations during partial operational capacity

This changed mindset promotes cooperation instead of adversarial litigation, which is particularly important in the long-term leases that require partners to cooperate to overcome shocks.