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Advice for commercial property owners during the coronavirus crisis

Commercial Property - May 26th, 2020

As we continue to work our way through the special measures in place during the Covid-19 epidemic, many commercial landlords find themselves in a difficult situation.

As we continue to work our way through the special measures in place during the Covid-19 epidemic, many commercial landlords find themselves in a difficult situation.

With businesses of every kind struggling, whether they are continuing to operate or have placed many staff on furlough, a number are requesting rent holidays or reductions, at least until they can resume full operation.

In the light of this, at Eatons we have received many enquiries by our commercial clients to ask for advice or legal clarification.

In the normal course of events, non-payment of rent and breach of contract could give landlords the powers to reclaim the premises in question. But due to the moratorium on forfeitures that is in place until 30 June 2020, and maybe longer, it puts landlords in a difficult position.

All cases are different so the general advice that we are giving is that each one must be taken on its individual merits. To ascertain these, however, there are a number of questions to ask and investigate these include:

  • Has the tenant maintained a good payment record in the past?
  • Does the tenant work in a sector that has actually been forced to close due to government guidelines?
  • If you hold any security in case the tenant defaults on the rent or fail to fulfil other obligations would you consider this is an appropriate time to use this power?
  • Have you received any concrete proof that the tenant’s business is genuinely suffering in the current situation and they are not just trying to take advantage of the moratorium to avoid paying rent? 
  • Is there a possibility to work with the tenant to propose a different payment schedule, either to change it to more or less frequent intervals to tie in with their cashflow?
  • How will deferring or postponing payment affect you and is it something you could do without too much detriment to your own finances?

Whatever the answers to these questions, once you get in touch with your tenants all contacts should be carefully documented. It’s also vital that you emphasise that it is their obligation to follow the tenancy agreement unless you expressly give them permission not to.

How to document any new and temporary arrangements

The best way of doing this is via a third party like Eatons and by issuing a side letter. By getting the right legal advice and showing the new agreement in the form of an official letter you’ll be taking important steps to prevent issues and misunderstandings from occurring later on.

For any more advice on your commercial portfolio, or if you have any questions about your duties and responsibilities as a commercial landlord, simply contact your nearest Eatons office or email us at enquiries@eatons-solicitors.co.uk and we will get back to you as soon as possible. Although our offices are closed we are still able to offer support and advice over the phone or via video conferencing.

 

DISCLAIMER: the contents of this article and any documents on our website are not intended to constitute legal advice but are intended for general information purposes only. We are not responsible for any loss resulting from acts or omissions taken in respect of the content presented herein. Please see our legal and regulatory information, privacy and terms policy on our website.