Like many other practice areas, landlord and tenant law has been impacted by the emergency legislation introduced following the Covid-19 crisis. The Emergency Measures in the Public Interest (Covid-19) Act 2020 (“the Act”) was clearly drafted with the residential sector in mind but it seems likely that the legislation will impact on the commercial sector also.
The Act creates an “emergency period” of three months from 27 March 2020 during which certain changes to landlord and tenant law will apply. This period may well be extended.
The more important changes to residential tenancies are as follows:
- Termination notices for existing tenancies cannot be served during the Emergency Period;
- Where a tenant received a termination notice and the termination date was reached before the Emergency Period, but the tenant has remained in occupation, the tenant is entitled to remain in occupation until the end of the Emergency Period unless there is a determination by an adjudicator or Tribunal to the contrary;
- Where a termination notice was served before the Emergency Period, and the termination date falls either during or after the Emergency Period, time will not run for the entirety of the Emergency Period;
- Rental increases due to take effect during the Emergency Period will not apply; and
- The extended periods of occupancy arising from the terms of the Act cannot be factored in when assessing whether Part 4 tenancy rights have been acquired by a tenant or not.
While clearly focused on residential tenancies, the Act includes a sweeping provision whereby “all proposed evictions in all tenancies in the State, including those not covered by the Act of 2004, are prohibited during the operation” of the Act. Whether this was the intention of the legislators or not, it appears to cover commercial leases as well as residential leases.
The first indication of the Court’s attitude to this provision would certainly suggest that there is an arguable case to be made that commercial tenants cannot be evicted during the Emergency Period either. An urgent application was brought before the High Court recently. The case in question involved a furniture company which was being prevented access to its unit by their landlord. The company secured an interim injunction allowing it access. One of the tests for an injunction is whether a fair question arises. The Court was clearly satisfied that this threshold was reached. It remains to be seen what happens if the case goes to full hearing.
What is clear is that any commercial landlord will have to think carefully before seeking to evict a commercial tenant. A landlord, however, is not prevented from advancing matters towards ejectment (whether by means of serving a forfeiture notice and/or issuing ejectment proceedings) during the Emergency Period.
For now, the safest way for both landlord and tenant to deal with the difficult circumstances they find themselves in is to try and reach a pragmatic and mutually agreeable temporary solution to any dispute. A standard lease is extremely unlikely to allow for rent suspension arising from a national health emergency or to contain a force majeure clause. Any contractual argument of frustration is unlikely to succeed. Crowley Millar is aware of anecdotal evidence that some entities have agreed a deferment of up to 50% of the rent which is then to be paid back over a nine to twelve-month period from reopening.
Certain institutional tenants are taking a more aggressive approach and threatening to withhold rent unless the landlord comes to the table. Ultimately, these are matters for commercial negotiation (and cool heads!). Any agreement reached however between landlord and tenant should be clearly documented and should not be entered into without legal advice.
If you want to discuss these issues further, please do not hesitate to contact either Brian Ó Longaigh or Catherine Keane or email us at [email protected]
Dated 22 June 2020
Crowley Millar Solicitors LLP Disclaimer: This is a general information note and is intended for information only. It does not constitute legal advice and should not be regarded as a substitute for legal or other professional advices. Such advice should always be taken before acting on any of the matters referenced in this information note.