- COVID-19 Funding & Support
- Is it possible to terminate a commercial lease in light of the significant impact that covid 19 will impact on my retail business, I have personal guarantees and a remaining term.
- Reply To: Is it possible to terminate a commercial lease in light of the significant impact that covid 19 will impact on my retail business, I have personal guarantees and a remaining term.
Reply submitted 16/04/20 @ 01:42am::
Sorry to hear what you’re going through. Commercial leases aren’t my specialty but I can have a quick look at the agreement, give you my view and point you in the right direction (e.g. I can recommend a number of good property lawyers). Feel free to email the agreement to me at firstname.lastname@example.org. As Andy mentioned, it will all depend on what it says in your lease.
Taking my legal hat off, I help manage a small portfolio of commercial properties (small retail) for a family trust so can give you that perspective. In my view owners and tenants need to constructively work together to help each other get through this.
Have you had a chat with the landlord/owner to see if they can help? I know the last thing we would want is to see a tenant’s business suffer because of current circumstances. What we’re doing is proactively assisting tenants where possible by reducing rents and reviewing the situation month-by-month (i.e. continuation of rent reductions after we move out of Level 4). In your situation it might be the case that you could continue your retail business if the owner offers some sort of assistance. You might, for example, not want to lose the location of your business but feel like termination is the only option right now. But would the situation change if the owner agrees to waive or reduce rental payments for the next few months? Whatever you agree it’s important to record this in writing (e.g. emails / agreement).
This needs to be balanced with the owners’ obligations to service their loans etc as there isn’t immediate relief available (there will be some relief in terms of depreciation on buildings etc that can be claimed later). The Government also announced on Wednesday some measures to help commercial property owners and tenants – there is a useful summary here.
Feel free to send that agreement to me.