On 25 March 2020 government put in place emergency legislation, known as the Coronavirus Act 2020. The Act prevents landlords of commercial premises from re-entering premises or forfeiting tenancies for non-payment of rent. The restrictions will initially last until 30 June 2020 but there is flexibility for government to extend the timeframe
As the COVID pandemic intensifies and the economic ramifications loom large, it is virtually certain that all businesses will experience significant disruption bringing with it the strong possibility of increased legal implications.
In particular, tenants of premises who have not been able to use them during the period of the pandemic will be looking to see whether there are any remedies they can use to escape liability under their lease.
In this note we look at some of the issues arising from Covid-19 on tenanted commercial property, namely:
- Whether Covid-19, or the closure of a building as a result of Covid-19 or a government-mandated lockdown, amount to a force majeure?
- Whether Covid-19, or the consequences of it, amount to an event which would frustrate a lease?
Many commercial properties are currently left vacant as bars, restaurants and retail units are closed and most office workers have relocated to their own homes. But what should landlords and tenants consider before pulling down the shutters for an extended period of time? We consider the implications on:
- Other lease obligations
- Securing the property