The emergency legislation on residential leases brought in for the coronavirus pandemic, does not deal specifically with commercial leases. In some cases, tenants of commercial property may seek concessions, particularly if their business has suffered as a result of the lockdown. Here are tips for landlords in dealing with that particular situation:

1 Review the lease and any side letters or supplemental agreements and ensure you understand the parties rights and obligations, in particular, whether there are any break options in favour of the tenant and whether there are guarantees or a rent deposit or other security in place.

2 Know that termination rights are not solely confined to the lease terms; they can be drawn-out and complicated for the landlord and could be tenant-led either by exercising a break option, or in the case of examinership or liquidation of the tenant.

3 Assess as best as possible the financial position of the tenant and how likely they are to trade out of the crisis; the more likely the tenant is to survive, the more likely concessions will be mutually beneficial.

4 If you are willing to grant concessions; firstly consider the options around what type of concession it will be. If there is a lender or other third party that must be considered, then their consent is required first before any concessions are made. Agreed concessions must be properly recorded in writing. And you must ensure the impact of the concession on any rent deposit or guarantee is also considered and recorded.

5 If not satisfied to grant concessions, consider exercising rights under any guarantee or rent deposit; ensure the tenant has your up to date contact details for formal notices under the terms of the lease; always keep in touch both with the tenant, and as best as possible, independently, with financial and legal developments affecting the tenant.

6 Entry of the tenant into any insolvency arrangement will be a trigger to reassess a landlord’s strategy and the available options.

7 Instead of exercising rights of forfeiture by going to court or forcing a tenant to, except in limited circumstances of early stage examinership, remember that there is always the option, where the parties agree, of agreeing an early surrender of the lease. This will be particularly attractive to landlords faced with the spectre of an insolvent tenant-led termination or an inevitably long drawn-out landlord-led process with no lease guarantee and little hope of recovery of rent arrears.

This article is intended as a guide only. Lease agreements should be reviewed with your solicitor if issues arise.

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