Sonder sues landlord for early lease termination

Miles Hurley Miles Hurley Uploaded 26 July 2020

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US: Sonder has filed a lawsuit against developer Brian Spiers to exit its lease at a San Francisco property.

The company wants to make Spiers honour the early exit clause of their lease, while Spiers claimed Sonder had not been paying rent since March.

The suit alleged that state and local emergency orders to slow the spread of Covid-19 had heavily impacted Sonder’s ability to bring potential tenants into the property. It referred to a city moratorium on evictions due to the crisis which may allow tenants to live in the property rent-free, while harming Sonder’s ability to advertise vacancies on the marketplace.

Sonder attempted to invoke its termination clause, but it was contested by the property’s owner, Spiers’ 2100 Market-Church LLC. Discussions were taking place between the two parties, according to Spiers, before the filing of the lawsuit.

Spiers claims that as long as the business is continuing to operate in “some capacity,” Sonder will have an obligation to honour the term of its lease. According to San Francisco Business Times, a company spokesperson did not say whether or not the company had paid its rent since the beginning of the pandemic.

Spiers said in a statement: “Needless to say, we strongly disagree with the position advanced by Sonder and at the same time remain puzzled by the ongoing failure of Sonder to pay rent to us despite Sonder’s collecting rent from its subtenants during the pandemic. We intend to exercise our remedies under the lease for the failure of Sonder to comply with its lease obligations, including Sonder’s failure to pay monthly rent to us when and as due.”

The property’s lease by Sonder initially drew controversy from the community over gentrification concerns and concerns that the service may contribute to the city’s housing crisis. Furthermore, a city ordinance had been introduced by district supervisor Aaron Peskin to limit the number of short-term rental style properties to 1000 in the city.

In June, Sonder closed a $170m Series E round led by Fidelity, WestCap Group and Inovia Capital, which brought its valuation to $1.3 billion.

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