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Commercial Property and COVID-19 – FAQs

In this legal insight, Partner Danny Schwarz seeks to provide clarity on practical issues that building occupiers and owners have experienced, by addressing some of the most frequently asked questions he and his team have Read more...

Danny Schwarz

Partner

Real Estate, Secured Lending & Banking

In this legal insight, Partner Danny Schwarz seeks to provide clarity on practical issues that building occupiers and owners have experienced, by addressing some of the most frequently asked questions he and his team have received.

What services can I expect from my landlord during this pandemic?

The current social distancing measures put in place by the Government, have meant that many of us have changed our typical working practices. Whilst we adapt to a vast number of services becoming temporarily unavailable, tenants may still require their landlords to uphold some key services – such as maintenance and repairs – even if they are no longer able to enter the property to provide them in person. The question still stands, how does the government’s requirement that people only leave their homes to work, if this work cannot be conducted from home affect the usual operation of buildings?

Can landlords restrict access to common parts?

In practice, the landlord cannot derogate from grant. If the landlord has granted the tenant rights over common parts (for example, to get to and from their premises), then the landlord cannot stop the tenant from exercising them. In spite of this, even if tenants have a right to use common parts, they are required to look carefully at their leases to see if the rights are only exercisable during ‘permitted hours’. If this is the case, can the landlord change the permitted hours (acting reasonably or otherwise)?

For example it might be deemed reasonable, for the landlord to radically reduce the ‘permitted hours’, for example, if they can merely get security or receptionist staff to work at certain times and/or on certain days.

Can landlords refuse to provide their usual services? Including cleaning, security and maintenance etc.?

General maintenance services 

Firstly, the landlord’s obligations will depend on the drafting in the lease. It is typical for a landlord to be under an obligation to use ‘reasonable endeavours’ to deliver services. These services could range from cleaning, lighting and heating in the common parts, grounds maintenance to the provision of security and reception staff members.

It is clear that COVID-19 will almost certainly give landlords a realistic excuse not to provide services, owing to lack of staff and access to or a shortage of supply, etc.

Consequently, it could be that the tenant can continue to use common parts. However, they will need to accept that the landlord is not going to be arranging for them to be cleaned. Considering thorough cleaning regimes that are currently recommended, this could certainly put tenants in danger. A lack of security could also be an issue for tenants. Individual tenants will need to consider the health and safety implications for their employees should they have a need for staff to continue to work on the premises.

Management’s obligatory services 

If you are the only tenant in the building, the Landlord may ask you to assume responsibility for carrying out the weekly alarm test, for example. The tenant should think carefully about whether they should do this and, if so, how it is documented. Also contemplate what happens if you are unable to do it, and what happens if a fault develops. Understandably, it is normal for the tenant to want to be as accommodating as possible. However, naturally the tenant would not want to be liable if the alarm is not tested and this has a repercussion on the validation of the insurance.

One solution might involve a new commercial agreements entered into, with money changing hands for the delivery / attainment of ‘services’ by the tenant in the landlord’s ‘absence’. It is advisable that legal advice should be sought before agreements are made.

How about tenants who have been left in financial difficulties, who are concerned that their landlord will forfeit the lease?

Under measures contained in the governments Coronavirus Act 2020, commercial landlords’ forfeiture rights for non-payment of rent are suspended until at least 30 June (date revisions TBC).  

Can tenants serve break notices when their landlord’s offices are closed?

If a tenant’s lease contains a break clause, then the process of serving the notice should be outlined in the lease, and this must be strictly adhered to. Therefore, the tenant will need to make sure that they are serving the correct form of notice, at the correct time, on the correct party. The COVID-19 pandemic does not have an effect on this. However, it may well make the requirements more difficult to fulfil.

We understand that the current situation is continually evolving and that new restrictions have created several complications for both landlords and tenants. But we strongly advise that both parties work together to come up with feasible solutions to keep buildings open. Many of these issues must be considered on a case by case basis and our team is on hand to support with any enquiries. 

If you would like to discuss any of the issues outlined above, please contact me using the details below.