Extension of South Australian COVID-19 commercial leasing laws


17 September 2020


Previously, we provided an overview of the COVID-19 Emergency Response (Commercial Leases No.2) Regulations 2020 (Regulations). This overview can be accessed here.

The Regulations are to be amended and extended by recently introduced legislation which is anticipated to pass the Legislative Council next week, to align with the extension of the Commonwealth JobKeeper scheme.

The COVID-19 Emergency Response (Expiry and Rent) Amendment Bill 2020 (Bill), once assented to, will implement the COVID-19 Emergency Response (Commercial Leases No.2) (Prescribed Period) Variation Regulations 2020 (New Regulations).

The New Regulations will extend the “prescribed period” under the Regulations from 30 September 2020 to 3 January 2021. This essentially means that for an extended period of time, landlords are prohibited from taking certain actions against SME tenants suffering financial hardship as a result of COVID-19. Such prohibited actions include:

  • enforcement actions against a tenant for certain breaches of a commercial lease (including failure to pay rent or outgoings);
  • increasing rent under a commercial lease; and
  • requiring a tenant to pay or reimburse for land tax.

Both landlords and tenants will also be required to continue to negotiate any variations to the terms of a commercial lease in good faith for the extended “prescribed period”.

The Regulations overall are extended by the legislative amendments, meaning SME tenants suffering financial hardship will have an extended period to potentially vary leasing arrangements and obtain further relief from landlords by way of mediation with the Small Business Commissioner (Commissioner) or by Court determination.

Furthermore, pursuant to the legislative amendments, parties are able to apply to the Commissioner or the Court to renegotiate, vary or set aside relief agreements made under the current Regulations that apply, or purport to apply, in respect of a period beyond 30 September 2020.

While these anticipated changes to commercial leasing laws offer extended relief to struggling tenants, landlords will be required to bear the economic burden for a longer period.

It is important for parties to consider how their current relief agreements are structured and whether there is scope for them to be varied, extended or revoked.

 

 

This article provides general comments only. It does not purport to be legal advice. Before acting on the basis of any material contained in this article, we recommend that you seek professional advice.

 

 

Authors:

 

Seva Surmei, Principal in our Business Transactions Team 

Contact
Email: ssurmei@dmawlawyers.com.au
Direct Telephone: +61 8 8210 2243

 

Jacqui Ballard, Law Graduate in our Business Transactions Team 

Contact
Email: jballard@dmawlawyers.com.au
Direct Telephone: +61 8 8210 2284