Commercial leasing code of conduct still causing confusion as WA government considers extending it

//Commercial leasing code of conduct still causing confusion as WA government considers extending it

Commercial leasing code of conduct still causing confusion as WA government considers extending it

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Some agents and landlords remain confused about the terms of the commercial leasing code of conduct introduced in May 2020.

Under the code, the minimum rent relief a landlord must provide to an ‘eligible tenant’ during the emergency period is at least 50% of the tenant’s reduction in turnover. This is not the same as 50% of the whole of the rent.

For example, if the tenant has experienced a 60% reduction in turnover, the rent relief offered by the landlord should be at least 60% of the rent. In other words, the tenant remains liable for the remaining 40% of the rent.

At least 50% of the 60% (i.e. 30% of the rent) must be in the form of a rent waiver and the remainder in the form of a rent deferral. The deferred rent becomes payable after the ‘emergency period’ ends amortised over the greater of the balance of the term of the lease and the period of not less than 24 months.

The above requirements can be changed if the landlord and tenant agree in writing.

The major problem with the above requirements is that, although the tenant may remain liable to pay a portion of the rent, it is unclear whether the landlord can demand payment before the emergency period ends due to an oversight in the legislation.

The legislation prohibits most enforcement action during the emergency period for a failure to pay rent unless the regulations say otherwise. However, the regulations do not say otherwise. Therefore, extending the emergency period without correcting this oversight may result in tenants failing to pay any rent at all knowing that they will not become liable to pay until the emergency period finally ends.

To find out more or if you have any queries relating to your commercial lease, please do not hesitate to contact me on 0408 954 570 or at tcockman@justicelegal.com.au.

Keep an eye out for further articles. This article is not legal advice and you should obtain independent legal advice to address your specific situation.

2020-08-20T20:09:23+08:00

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