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Covid-19 – Are Your Tenants Avoiding Paying Rent?

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Covid-19 – Are Your Tenants Avoiding Paying Rent?

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Are you worried that your commercial tenants are using the new Covid 19 laws to avoid paying rent? There may be another option.

As we all start to settle into this new "normal" some commercial tenants have sought to take advantage of the new emergency legislation as a way to avoid paying the rent lawfully due under their commercial lease. So what can commercial landlord's do to protect themselves if they believe they have a tenant who is able to comfortably pay rent during this period, but is simply refusing to do so safe in the knowledge the lease cannot be forfeited? Well the good news is that all is not lost.

Whilst landlords are unable to bring any forfeiture action for non-payment of rent they can now look to use other rent recovery procedures, such as Commercial Rent Arrears Recovery or issuing Statutory Demands without fear that such acts may be deemed as them waiving their right to forfeit. As a commercial landlord you were unable to previously take these steps if you later wanted to forfeit the lease for non-payment of rent however s. 82 of the Coronavirus Act 2020 ("the Act") has changed this.

The new legislation means no conduct of the commercial landlord during the Relevant Period (as defined by the Act) will be regarded as waiving their right to forfeit unless they expressly state this to be the case in writing, which would be very uncommon. Therefore if a landlord believes that their tenant is capable of paying the rent during this period they may wish to consider instigating Commercial Rent Arrears Recovery action or issuing a Statutory Demand. In the event that the tenant still continues to default in paying rent the landlord can then look to forfeit the lease once the Relevant Period has come to an end.

Of course, like most things, the devil is in the detail and matters should always be considered on a case by case basis however the wording within the Act means that there is a level of protection also awarded to landlords during these uncertain times.

Should you have any queries in relation to what the Coronavirus means for you and your commercial tenancy agreement please contact Lauren Smith on 01922 707048.

There have been further developments since this article was published. Please follow this link to read about the updates: Covid-19 – Landlords and Recovering Rent

Lauren Smith, Civil Litigation Solicitor, Enoch Evans LLP

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