COVID-19 lockdown has affected many small business tenancies and leads them into financial difficulty. Our Government has regulations in place for SME rent relief, however, what is there to protect the lessor and what are their obligations?

Rights and Obligation

With Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation, the lessor ought to provide a reduction of the amount of rent to the lessee if they are an eligible business for the Commonwealth Government’s Jobkeeper programme. The lessor is liable to receive the deferred payment after 30.Spetember.2020, and the lessee could finish payment of the deferred rent amortisedly over a period of at least 2 years but no more than 3 years.

 

  • The lessee does not pay the rent

Even with the reduction of rent, there still some situations that the lessee refuses to pay the deferred rent. In this case, the lessor could seek alternative ways:

 

  • Give a dispute notice to the small business commissioner to start a private mediation conference. During the mediation conference, both parties must attend in person, if one party fails to attend the conference, the court or tribunal could award costs against the party in the proceeding. If both parties reach an agreement about the dispute, there must be a settlement agreement be recorded in writing and signed by both parties.
  • If neither side agrees to reach an agreement at the mediation conference, the lessor could apply to QCAT (Queensland Civil and Administrative Tribunal) or a higher court to resolve the dispute. The court will take the implication of COVID-19 and negotiation between both parties about the reduction into account to make orders such as requiring one party to pay an amount or the amount of rent payable for the response period or how rent is to be worked out.

 

  • The lessor refuses the discount

Another common situation is a lot of lessors refuse to provide discounts to their lessees because lessors concern about the potential risk to suffer loss and the possibility of the lessees move out of the premises without paying the rent. In that case, we recommend:

 

  • Start a private mediation conference or apply to QCAT. The COVID-19 Emergency Response provides protection to both lessors and lessees, the proceeding of mediation and QCAT is not exclusive to lessors, if you think your situation satisfy with the requirement of the COVID-19 Emergency Response, you have the right to acquire the discount of the rent.
  • Consultation with professional legal assistance. Another way is consulting with legal assistance, if you concern mediation or QCAT will be too complicated to deal with. After knowing about your situation, legal assistance could provide you professional advice that could be more suitable to you rather than going ahead with mediation or QCAT.

 

For your best interest, we recommend you carry on the negotiation with professional legal assistance to minimize the risk. Morrison Specter could provide you with legal advice and assistance.