Ogier urges tenants and landlords to look at leases ‘sooner rather than later’ to determine Covid-19 impact
Cayman: Ogier urges tenants and landlords to look at leases ‘sooner rather than later’ to determine Covid-19 impact
William Jones, a partner in Ogier’s Cayman Islands dispute resolution team, and Nat Duckworth, a barrister specialising in landlord and tenant law in London, have joined together to consider whether, in light of Covid-19, tenants who cannot use the property they are renting must they pay rent, in full, to their landlord.
With stores, bars, offices, gyms, industrial premises and most other places of business closed across the Cayman Islands, and many properties used as second homes or rentals also lying empty, the question has become increasingly important.
William said: “Covid-19 is an unprecedented event. Lockdown measures implemented in response to it give rise to all sorts of questions that property owners and businesses simply have not had to think about before. The best advice, for both landlords and tenants, is to get ahead of this: look at your lease, take advice about its contents and put a clear strategy in place, sooner rather than later.”
William and Nat explain that each case, and in particular each lease, is different, so landlords and tenants should always take their own legal advice. But, in summary, landlords and tenants should consider:
- Rent suspension or rent abatement clauses in a lease
- An implied term of the lease that the rent should be suspended or reduced
- “Frustration” of a lease due to legislation requiring businesses to close
- Whether the legislation is a “supervening illegality” that means the tenant’s rent is suspended
- Whether the landlord is in breach of the “covenant for quiet enjoyment” if the tenant cannot use the property and therefore liable to pay damages
- Is the landlord obliged to pursue an insurance claim and to credit the tenant with the proceeds
- If the landlord “forfeits” the lease for non-payment of rent, would the court make the tenant pay all or just part of the arrears as the price of getting his lease back?
William added:
“Nat and I realised that questions like these are absolutely vital to answer while both tenants and landlords struggle with the current situation. To look at individual cases it is obviously necessary to delve into a few legal questions.”
ENDS
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