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You know, you can execute the mortgage deferral, and some of you will even execute that mortgage. And you’re not even going to pass the savings on to tenant. You know, you’ve got those small businesses and I always tell people that I look at small Edmonton Business Consultant. Like most people look at babies. You know, if you kill one of those small business babies, when you could have done it, you are the exact same person as that person going to Costco and buying a load of hand sanitizer and marking it up on eBay. You are the same person. You are the parasite. You are the suck on the society. And I hope your first name, your last name, the picture of your face is all over social media.

I can see you a whole lot with these two. Uh, I can be a, or I’m B cause it’s mad.

Hi. Thanks for tuning in for another episode of ask Sperl CPA. Um, and today we’re talking about COVID-19 rent for Lee here with Trevor from inspired method, Trevor, how you doing? I’m doing well doing well. I am COVID free Colburn free and living well. And you were covered for yes. Good. So Trevor, you know, what are the questions? This is, this is, this is the issue, right? Is the issue. Yeah. It’s one of the big issues out there on a scale from one to 10, how contentious is this issue? This is going to be a 10. This is going to be an absolute 10 out of 10. Be a fight, going to be a fight. Absolutely. It’s going to be a fight for the tenants. It’s going to be a fight for the landlords. And I really hope cooler heads prevail. People have to look at the big picture here because this is a significant one in a hundred year event.

So. All right. So should you consult your own accountant and lawyer on this issue? Yes. You should. 100%. I mean, you cannot use this video in place of legal or accounting advice, slay. I mean, I I’m telling you because I know that there is going to be multiple, multiple lawsuits that result from this issue. Whether I put out this video or not hope for this video is used that, you know, people can come to real amicable agreements now, because I don’t know if they’re going to have the ability to come through an agreement later on a lot of these issues. It’s kind of, you know, we need to do this, you know, uh, you know, uh, you know, the tenants out there, landlords out there need to get together and find a solution now, but consult your own lawyer, your own accountant because I’m telling you there’s no easy choices out there right now.

Okay. Um, next question is, are most people underestimating the economic effects of this pandemic? Yes. They’re dramatically underestimating the economic effects. I think the economic effects are worse than the actual sick Sarah likely. Right? They’re very likely. Um, and most people are thinking we’re shutting down for two weeks. We’re shutting down for a month and an aide I shut down. Could you mow far longer and be, even if it opens up, it’s going to be tough times out there. Uh, and people need to plan for this now. Right? You can’t plan for when you know, people are broke. Like, you know, we got a plan for it. Now, both as tenants as landlords, we’ve got to make realistic solutions now. Alright. Now what do you see Canada looking like in 60 days? These are some like grim projection, but I mean, it’s, it’s, we’ve seen it in other jurisdictions at this point.

The, where, you know, we’re thinking that it’s bad now, you know, it’s looking like it’s going to be worse than April. It’s looking like it’s going to be worse again in may. Um, you know, whether what, what your degree on the scale is of what you think that if the panic is appropriate or not, the panic is going to exist either way. And I mean, it would not surprise me 60 days from now to see, you know, things like mild looting instances, isolated instances of loony, uh, you know, meaningful increases in crime rate. I think people are going to dial back in, you know, eventually they’re going to realize that we’ve got to get back to work. You know, we have to maintain order, but you know, people are going to panic and you are going to see people making really poor choices and you know, these sort of things are gonna happen.

So looting, vandalism crime rate, um, I’m expecting it. I hope it’s, I hope it’s, you know, minimal. Um, but I, I, at this point I would not be surprised. Yeah, you can’t rule it out because we don’t know, like it could get really bad or it might not. Right. We just don’t know. Um, now what sort of timeframe should people consider for this issue? I think the, the medical part of the issue is probably going to increase until, uh, about may. I know I really had the issue with all these government issued statements, which very rarely throw real numbers in terms of how many ICU beds we have and how many we need and what the projections are looking at. They just tell us these vague truths and hope that we’d make plans on it. But I mean, uh, and it’s unfortunate that I’ve had to try to play a infectious disease expert, but I need numbers.

I need some dates there. Right. And I’m looking at me, um, and I’m drawing from other jurisdictions like the, you know, New York, they’re being very forthcoming with their data. Um, and we’re looking at, you know, the, the, the pandemic peaking, you know, in Canada, you know, say 60 days from now in may, right. And then this being a really, really significant economic event until the end of the year. So it’s, it’s going to affect us for, for the longterm for this year for sure. Uh, next question is, do the current initiatives available favorite landlords or tenants? They hugely favor the landlords. The landlords can defer their mortgage. It is an absolute, you gave the landlords the nuclear grenade, like you just gave him the nuclear bomb to deploy this. Right. Um, the tenants get very, very, maybe they can defer a little bit of utilities, right.

Um, you know, uh, BC has come up with a, uh, I believe BC is going to do a $500 grant again, delivered to the landlord. So as my understanding of the program, but the tenants don’t have nearly as much as you would think. Right. Um, you know, landlords are winning on this one for now, for now. Um, so next question is, what would you say to the landlords telling Edmonton Business Consultant owners to look at other options? Well, first of all, I get it because I’ve listened to the press conferences and you watch, you know, the prime minister speak and then all of a sudden you think, well, money’s just falling from the rafters. Every bank is lending to a business. Like that’s not happening. That is just not having it sounds good. Right. And they’re given $10 billion or whatever, they have to pump through BDC, but it will see how much is left after they get most of it to air Canada.

And Bombardia right. But it’s not coming to your local restaurant or your local shop or your office, like not yet for, not for potentially months at this point. Yeah. Um, now if you’re a tenant, what’s the first step. So if you’re a tenant, the first step is, you know, educate the, educate the landlord because they don’t, a lot of people don’t know they’re not following this. You know, especially landlords are, you know, people are, aren’t thinking that this is that significant event, even forwarding this video, if you want to get the conversation started, but you know, you should approach your, your landlord. You recognize that your, your, your blindside with him here and just say, Hey, look, this is going to be real tough. This is we’re going to be real tough for my business. You know, I really value, you know, I like, I like being here, but can you please look at the mortgage, uh, deferral options and, and pass those savings onto me.

And that’s just step one, just, just make the soft ask on that. Yeah. Now do you favor deferrals or reductions for most situations? So it’s going to sound like, okay, we could defer a lot of people say, let’s defer, we got the mortgage referral, but just think about how a mortgage referral works. You know, mortgage deferral works where potentially that amount could be paid back, you know, instead of that mortgage taking 20 years, it’s going to take 20 years in six months, right. Or we’re talking about amortizing that deferral over the remaining 20 or 10 years in the mortgage in terms of deferring a rent, most rent agreements, aren’t that long, right? Like it’s, there is no opportunity to defer it like that. Um, and the chance of, you know, your tenant, they’re struggling now that somehow in six months from now, they’re going to come back and be able to make double payments or 25%.

You’re just kicking the argument into another. You’re not solving the problem. Right. You’re just pushing the argument into another time period. You’re not getting probably not getting a great solution for either party. Really? So, yeah. So the next question that we’ve got here is a Advil. Landlord does offer any reductions. What should you consider? Well, I mean, if the landlord offers the reduction, that’s what you’re looking for. Right. And if they don’t, I mean, if they don’t, you gotta consider her part ball at this point, right? I mean, it it’s, it’s, it’s survival out there and you, don’t got a lot of options. You can’t go and beat up all your suppliers and Edmonton Business Consultant owner, even if you did it wouldn’t matter anyways. Right? There’s only so many staff you can lay off and the other government might send you 2000 bucks a month, but you’re not going to pay your $5,000 commercial lease from that.

Right. It’s just not going to happen. Right. So you got to really look at a, at a hard ball solution and it might be, Hey, look, either you reduce this rate by 50% or I’m not paying. And I revoke my pre my permission for you to debit my account. And I’m going to call the bank and I’m going to do the same and I’ll make sure they block that rent event. You might have to play that game of chicken. It’s unfortunate. I hope it doesn’t happen to too many people. I hope lamb landlords. They’re watching, they’re telling you in, you know, you’re, you’re hearing it from the premiums. You’re hearing it for the prime minister. They’re expecting landlords to come to an agreement on this and be reasonable. Um, but you know, if people think that it’s just gonna blow over, um, I don’t think it’s going to work out that way.

No. Now does attendant risk hurting their credit rating by doing this? I mean, this is why we say consult your accountant, consult your lawyer. Very, very realistic possibility that the tenant, you know, you’re going to, you know, uh, hurt your credit. You know, this is going to be a black Mark on your credit. It’s going to reduce your ability to borrow in the future. That’s a very realistic outcome. It’s unfortunate, but this is what we’re facing right now. Does a tenant risk having to pay more later. Yeah. I mean, they could get sued over this. They could have to pay legal costs if they go down that road. Um, you know, there could be provisions in the agreement that they have to pay interest on it or whatever. It is a very, very likely scenario where that happens. So now should the landlord consider it the rental market right now?

That’s right. The obvious thing is going to be in a tent. I got this lease here. You’re going to have to pay. I’m going to be able to enforce it. You got to do it, but hang on just a second, mr. Or mrs. Landlord, just take a step back. Just take a look around. Um, businesses are closed. I don’t mean slow. I mean, they were flat out closed people. Aren’t legally allowed to open them in some industries in some jurisdictions. So even if you could get rid of that tenant, can you, who are you going to rent it to? I’m like, who’s going to rent that space. What are your options right now? If someone wants to pay you 50% of that rent, what’s your other option? What’s your plan B if you don’t take that, leave it vacant. Now let’s question that I have, Josh is, um, why should the landlord care about the tenants longterm cashflow?

So this isn’t like a lot of landlords are just thinking, I’m just going to see, I’m just going to collect one more month rent and we’ll see how bad this is, right? That next month rent could be the difference between them succeeding or failing at this point, because there’s, I mean, this is unprecedented. You run business plans on the assumptions that, you know, things might slow down. Maybe things go to 50% capacity, maybe 25. But I mean to be completely shut down. Most people don’t have any contingency for that. And if they issued that next month’s rent, I mean that April 1st rent, that’s a few days away from them. That’s the difference. Even if they want to pay you, they might not have enough money to pay their suppliers, pay their staff. Their entire Edmonton Business Consultant could grind down. This is, this is urgent. This is situation critical, both from the, the a tenant’s point of view and the landlords protect.

Cause remember we talked about before, if they do fail, who else is going in there right now? You know, we’re, you know, actively people come to us and they say, I got money starting a business. I’m like, not now don’t do it. Now let’s talk in six months. So you know what? That next tenant is going to be very hard to come by. So putting your existing tenant behind the eight ball, even if they’re willing to pay might not be the best longterm solution. I haven’t been, I don’t mean super longterm. I mean, just like, if you just look at your cashflow by the end of the year, it might not work out. Yeah. Because a lot of people run on extremely tight margins and it’s just not a lot of that extra cashflow going around. Now, the next question, should the landlord consider the ability to evict right now?

Yeah. I mean, some jurisdictions have the ability to prevent you to evict, right? Alberto is holding off on that, right? The NDP are trying to lobby and get it. You don’t get that. And then you’re holding a photo, but are they really holding off on it? Look at the fine print on it, go ask your lawyer. If there’s any civil cases being heard right now, the court systems are froze. So yeah, theoretically you kind of victim, but there’s no court to get it in front of at this point. So it’s like, you know, if it’s speeding, it will say, we’re not going to make speeding illegal, but all the photo radar bands are in the shop and speed cannot speed. Um, you know, that that’s, that’s kind of the, this isn’t apps that you just, it just speaks to the gravity of this situation. I had to do some research and by my research it’s it appears that the court houses were more open in world war two than they are right now.

This is a once in a hundred year event. So like get the gravity of that. You might think you can enforce it. And maybe you’re a hundred percent right. In your agreement, but you know, you, how are you going to enforce it? If the, if the courts are closed. Yeah. Good luck. I know. Is there a complete legal certainty in lease agreements right now? So, I mean, talk to your lawyer, but you might, you, if you had an ironclad agreement a month ago, it might not be ironclad anymore. Like there’s some ambiguity, there’s always these, uh, you know, think about the, the, the proposal or the information on the property that you gave people about. What’s in the neighborhood. All of a sudden, it’s all fake that walk up, traffic doesn’t exist anymore. And in some agreements, I’m reading articles now that there are very big act of God to clauses that no one ever thinks about, because they’d almost never be executed.

We might be on that scenario. So, you know, as a landlord, you need to talk to your both sides. We need to talk to your lawyer. You know, is there a clause in that agreement? Is that agreement even enforceable right now, it might have been enforceable for the last 30 years with never a pro, but this might be the event that triggers a clause in that contract. That all of a sudden that is no longer an ironclad contract. Next question is, um, let me just see here. One second, walk, a landlord through a scenario of ended with nothing to lose. So here’s what you think. I know what you’re thinking out there. Tough guy, landlord. You’re out there and you’re thinking, don’t worry. I got, I got great lawyers. I got money. I got time. I can wait. I was like, okay, here’s how that works out.

They’re coming to me. They’re coming in here to me and they’re saying, Hey, gosh, I got this ironclad agreement. I’ve already talked to a lawyer. I can’t get out of it. And I was like, okay, should we pay? I might tell them no. And here’s why I might tell them no, I, and I know that if they pay that rent, that bankruptcy is a certainty. And I don’t mean just bankruptcy for the business that they are facing personal bankruptcy. Why would I tell them to make that rent payment? When I know they got a shot, if they don’t make the right payment, when I know it’s complete bankruptcy wanting. So, I mean, they’re going to declare bankruptcy with their Edmonton Business Consultant. They’re going to declare bankruptcy and they got nothing to lose. They got nothing to lose. So they’re not worried about your legal demand letter because they know on this, on this side, I might get, you know, I might get sued in court.

On the other side, sitting here is guaranteed bankruptcy. They’re going to take your legal demand letter and they’re going to keep operating. You’re going to go. And you’re going to put a lock on the door and they’re going to cut it off and they’re going to keep going. And there’s no court for you to kick them out at this point. So, I mean, like we are a real dire time. People aren’t really getting the gravity of that situation here. So, I mean, I urging people, you got to come to a realistic agree. I don’t see a lot of scenarios out there. One party is going to come out with a head, uh, by, you know, uh, you know, not being realistic about the situation. Yeah. Do you like the public scrutiny of opportunistic people? Reselling things like boiled paper. Oh, and I love, I love these guys.

They think they’re an entrepreneur. They think they got their hustle on meanwhile, some, you know, uh, grandma’s, they’re wondering why she can’t buy, you know, a hand soap for her bathroom and you think you’re a genius entrepreneur and you’re nothing but a parasite. So if you’re the person going to Costco right now and trying to Mark that up on Kijiji and people are just trying to keep a little bit of hand sanitizer in their house so they can keep their family safe. You are a parasite and a, you know, I’m glad they’re outing them on social media. I’m glad they’re putting the pictures of their face and their first and last names keep doing it. Yeah. A hundred percent. Now, what would you like to see happen to landlords who don’t help tenets? Here we go. This is the landlords and toilet paper price. Gougers.

So this is out there for you. I know some of you, I know there’s going to be someone out there. Who’s going to look at this and attendant is going to forward this to you. And you know, you can execute the mortgage deferral, and some of you would even execute that mortgage. And you’re not even going to pass the savings on your tenant. You know, you’ve got those small businesses. And I always tell people that I look at small businesses. Like most people look at babies. You know, if you kill one of those small Edmonton Business Consultant babies, when you could have done it, you are the exact same person as that person going to Costco and buying a load of hand sanitizer and marking it up on eBay. You are the same person. You are the parasite. You are the suck on the society. And I hope your first name, your last name, the picture of your face is all over social media.

And I’m going to commit right now, right now, if you are the landlord that you know, doesn’t try to help a tenant here. You don’t make best there. I know not everybody can do it. Everyone has different situations, but I know most of you can do more than what you’re doing. If you are the landlord out there and you put one of those small business babies that add up, you know, I want a small business babies out of Edmonton Business Consultant, your first name, your last name. I want you to Google, Google, Edmonton CPA, and see me at the top of the list. You are going to find your name at the top. Whenever someone Googles your, you know, John Smith, Edmonton, and they find you, they’re going to see what you did and you know who you are. It’s going to be a matter of public record and you won’t be able to hide from it. And so we have for today. Thanks very much. Welcome to the pirate ship.