Negotiating with your Landlord or Tenant
For most businesses, your premises are your most significant asset. Commercial leases can represent a commitment to pay very significant amounts of money over the term of the agreement.
The COVID-19 crisis has put an unprecedented strain on the relationship between Landlords and Tenants. We are now experiencing a situation where many businesses are required by law to close or scale back operations. In some circumstances, government directions or travel restrictions have meant that customers or clients can no longer use the business’ services. Many struggling tenants – through no fault of their own – are in a position where they simply cannot continue to meet their financial obligations under their leases, or where doing so would result in the business being unable to survive in the short to medium term.
Nobody can predict what your circumstances look like in several months. The Landlord and Tenant should avoid making long term commitments which do not have a degree of flexibility in them if there is any uncertainty as to whether they will be able to be met. A series of short term agreements, or agreements to review the situation at certain intervals, may be more appropriate until the parties have a clearer picture of how the business is expected to perform.
Further, preserving the relationship with a good tenant and ensuring that your tenant’s business is able to recover and continue after COVID-19 has passed will benefit you in the long term.
Elringtons can assist you with a review of your commercial lease, advice on the effect of the new Code, or assistance in lease negotiations.
Looking for more information about the new Code of Conduct? You may be interested in our article COVID-19: Mandatory Code of Conduct for Commercial Leases by Geoff Milani.