22 May 2020

Keep the faith

Sale, Purchase, Mortgage, Lease
New South Wales

Asked

Commercial lease – COVID-19 regulation – Good faith leasing principles

We have a client who runs a café and is a tenant under a commercial lease. To date, they have been able to meet their obligations under the lease, but they are now experiencing financial issues due to the COVID-19 situation. Our client would like to approach the landlord to seek a reduction in the lease payments. Is there any COVID-19 legislation that can assist in these negotiations?

Answered

Thank you for the question.

The National Cabinet Mandatory Code of Conduct, released on 7 April 2020, imposes a set of good faith leasing principles that apply to commercial tenancies where the tenant is an eligible business for the purpose of the Commonwealth Government’s JobKeeper program. The principles apply to negotiating amendments in good faith to existing leasing arrangements. The principles may be referred to when approaching a landlord for negotiations.

The Code of Conduct applies to NSW commercial leases through the Retail and Other Commercial Leases (COVID-19) Regulation 2020: see r 7 and the regulation generally.

Regards

Mentor