房东与租客之租金博弈 - Legal rights for Landlord or Tenant during lockdown [ 05/05/2020 ]
The level 4 or level 3 lockdown has raised the question of whether the lockdown constitutes a denial of a leases that contain "denial of access clauses” in ADLS lease document clause 27.5.
Clause 27.5 states:
If there is an emergency and the Tenant is unable to gain access to the premises to fully conduct the Tenant’s business from the premises because of reasons of safety of the public or property or the need to prevent or overcome any hazard, harm or loss that may be associated with the emergency including: . . .
(c) Restriction on occupation of the premises by any competent authority .Then a fair proportion of the rent and outgoings shall cease to be payable for the period commencing on the date when the Tenant became unable to gain access to the premises to fully conduct the Tenant’s business from the premises until the inability ceases.
Clause 47.1(d) defines an "emergency” to mean a situation that:
(a) Is a result of any event, whether natural or otherwise, including an … epidemic; and
(b) Causes or may cause loss of life or serious injury, illness or in any way seriously endangers the safety of the public or property; and
(c) The event is not caused by any act or omission of the landlord or tenant.
租客权利 v 房东权利
The current covid-19 epidemic we are facing is arguably supported under this clause.
As tenants unable to gain access to the premises to fully conduct business, clause 27.5 states that the tenant would not be liable for a proportion of rent and outgoings from when the tenant became unable to gain access until that inability ceases. It is also important to know that clause 27.5 operates automatically, no notice from the tenant is required.
So, what does this mean for you as a tenant?
This means that rent may be negotiated. Keeping in mind the outcome should determine a fair proportion. Under the current circumstances, generally a 50/50 share of the rental could be a starting point and negotiating from there.
这意味着可以协商租金。 牢记结果应该确定合理的比例。 在当前情况下，通常可以将租金的50/50份额作为起点并以此进行谈判。
Even if your lease agreement is pre 2012 or is bespoke, it does not mean that there isn’t an argument that can be made. It is highly arguable that the pandemic with Covid-19 is an occasion that has frustrated many contracts, and obligations of the contract cannot be fulfilled.
On the other hand, The ADLS lease prevents a Tenant from withholding rent. The Tenant is obliged to pay the rent without any deductions or set off. Therefore, if the Tenant is unable to reach agreement with the Landlord the Tenant is obliged to make payments of rent and opex as and when they fall due pending reaching an agreement to avoid technically being in default under the lease.
另一方面，ADLS租赁合同规定租客有义务全款缴付租金， 不得抵扣。 因此如果承租人无法与房东达成协议，则承租人有义务在达成协议之前在到期时全额支付租金和运营费用，如地税，管理费等，以避免从技术上讲违约。
If there is no agreement can be reached between Landlord and Tenant, both the Landlord and Tenant have rights to refer the matter to a mediation or attribution for a dispute resolution process specified in the lease.
Fair proportion does not authorize the Tenant not to pay any rental or opex because they are unable to access the premises. It is abundantly obvious that Tenants continue to have some form of occupation of the premises for example furnishers, sign, stocks, plant, physical address for post, equipment and others.
In some instances, we note some Landlords are indicating a willingness to consider rent abatements and/or deferments of obligations of rent payments for periods longer than the level 4 or level 3 lockdown.
We must stress that Tenant’s failure to either engage with its Landlord or simply to refuse to pay any rent or opex raises a real risk that their lease as being in default. Tenants also need to recognise that the closedown is not an excuse to simply not pay rent or opex.
Tenants should also keep in mind that if they are in default under the lease this could potentially have implications under personal guarantees or existing bank guarantees/rent bonds. In this regard Tenants may find that Landlords have exercised their rights against the bank guarantee or rent bond and that there are obligations to top up under the terms of the lease once some form of normality returns.
Theoretically, the landlord could serve termination notice on tenant for their default under lease. But the Landlord must serve the due notices under the Property Law Act and provide the statutory timeframe for a Tenant to rectify any default.
Both Landlord and Tenant would also have to consider the availability of an application to the Court for urgent relief against cancellation. In the circumstances in particular if the issue is around agreement on what is a fair proportion of abatement, it is highly likely the Court would be sympathetic to a Tenants request for such orders. But this will be decided on case by case basis.
One other hand, Tenant and landlord both needs check their business insurance, although most insurance companies are refusing to respond to this situation under business interruption or loss of rent policies. Most policies have contained exclusions in relation to notifiable diseases and pandemics since the SARS epidemic but it would still be wise to check your policy, If the insurance covered the said pandemics, the issues may be resolved by insurance funds and those benefits must be passed under the provisions of the lease.
The final aspect to be considered is that the Government has indicated the prospect of some form of financial package for hopefully Landlords and Tenants. Any arrangements entered into in the interim should be carefully perused by lawyers and worded to ensure those legal rights and allow for future changes.
Hong Hu Lawyers has about 20 years legal practice experiences in New Zealand and many years in other countries like Australia, are ready, able and willing to provide quality and practical legal advice and assistance to our clients in relation to these new matters both from a Landlord and Tenant perspective including suggestions on the framework for such arrangements.
Hong Hu Lawyers does not represent or warrant that this article provided any legal advice to you, on the basis that you have such responsibility for any loss, damage or consequence resulting directly or indirectly from this article, therefore seek your own legal advice please.