As an active member of the Tweed Heads Chamber of Commerce I enjoy the company of Jim Wilson, principal of Wilson Haynes solicitors-conveyancers, who has helped me in our Well-Being Australia ministry.
Jim sent me a circular alerting landlords and tenants that the terms of current commercial leases are heavily weighted in favour of landlords. This applies, he says, for the world as we might expect it - after COVID-19.
This is important and therefore I am placing it in my column –
Jim Wilson says, "In commercial leases the landlord requires the tenant to use the premises for the purpose agreed in the lease. However, I query whether the 'force majeure' provisions of many leases are adequate enough to give the tenant the right to suspend lease payments and other obligations under the lease, without penalty, in circumstances such as the current COVID-19, or future externally-caused disruptions."
Mr Wilson went on to say,
"Landlords will now have to realise that COVID-19 will give tenants a good taste of staff working remotely from home, with first-class connectivity to management, clients and suppliers, and no decrease in customer service.
“This means that, at the very least, post COVID-19, business tenants may decide that they do not need as much area for their tenancies as previously; indeed their office may now be a smaller 'serviced office' coupled with staff working from home, rather one requiring a lease of larger commercial floor space."
"At the same time, it is also important that tenants/lessees use the current down time to take stock of their future business models and how this may lead to a requirement for tenancies of much smaller floor space. It follows that tenants/lessees may not renew their existing leases.
“Time will tell whether there will be a downward adjustment to market lease rates and other obligations under leases. I think there should be. One thing is for sure, businesses looking for new leases, should approach their negotiations on the basis that they are in a position of relative strength vis-à-vis landlords." Mr Wilson emphasised.
Jim Wilson concluded by advising business owners,
"Despite whatever COVID-19 government assistance might be forthcoming for landlords, lessees should enter into immediate discussions with landlords based on lessee financial hardship, aimed at properly documented variations to existing leases, in respect to rental holidays; sidelining responsibility for other tenant obligations under their lease; and recalibration of the 'force majeure' provisions of the particular lease."
There you have it - both sides being offered solid recommendations. Should you wish to connect with Jim Wilson – text him on 0415-645121 jim@wilsonhayneslaw.com.au
Principal and Director -Wilson Haynes solicitors-conveyancers-business advisers-Southern Gold Coast/Tweed
As a matter of interest The New Daily ran an article yesterday viz working from home might become somewhat the new norm post Covid 19
https://thenewdaily.com.au/news/coronavirus/2020/04/02/working-from-home-benefits-2/