The Impact of COVID-19 on Commercial Leases
During the last 2 weeks a large number of our landlord and tenant clients have requested our advice on the impact of COVID-19 on their commercial leases.
As a general comment the impact of COVID-19 is dependent on the terms of the specific commercial lease in question. However, the COVID-19 Disease Emergency (Miscellaneous Provisions) Act 2020 (‘Act’) came into effect on 27 March 2020. The Act will last for at least 120 days (‘Emergency Period’) and the Act provides that this period can be extended.
Under section 22 of the Act the Minister may by notice declare that a commercial lease cannot be terminated or be subject to a rent increase during the Emergency Period. This applies to all leases within a class of leases specified in the Minister’s notice.
It is likely the Minister will issue a notice, however, in the absence of a notice from the Minister, commercial leases are not affected (depending on the terms of each lease). There is no indication of the exact timing of such notice and no information has been provided as to the scope of the class of leases that will be affected.
In relation to outgoings payable under commercial leases, section 23 of the Act gives the Treasurer the power to issue a notice declaring rates, fees, state taxes and other charges not payable (or payable at a reduced rate) by the members of the identified classes in the notice. This has the potential to impact both outgoings levied against landlords and those recoverable from tenants under commercial leases.
We are happy to assist landlords and tenants in relation to commercial leases in these difficult and challenging times.
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