Letters to your landlord

Most leases will require the tenant to pay rent, outgoings and any other money due under the lease, regardless of any external conditions or situation (including a pandemic or similar event). 

In those circumstances, it is recommended you engage in direct and up-front communication with your landlord to try to negotiate a full or partial abatement (reduced amount) of all payment obligations for the period of the pandemic. 

With luck, your business has an understanding landlord with whom you have a good ongoing commercial relationship, and they will be open to such discussions and (hopefully) temporary alternative arrangements. 

It is important to remember, however, that small landlords will be facing similar difficulties (for example, they may rely on rental income to fulfil their own obligations under a mortgage of the relevant property) and any concessions to their tenants may rely upon them being the recipients of similar concessions from their mortgagee.

It is important that you are proactive and start the process. Your lease will almost certainly require you to pay rent, outgoings and any other money to the landlord regardless of any external conditions and will also provide that a failure to do so gives the landlord the right to terminate. 

You need to commence discussions with your landlord as soon as possible, and before any non-payment or other breach sours the relationship between you or, worse, leads to termination. 

Open, honest and bona fide discussions with the landlord are imperative so that each of you understands the challenges faced by the other, and you can together work out a mutually agreeable approach that takes the needs of both parties into consideration.

You need your landlord’s commitment in writing to anything that has been agreed between you. 

This can be as simple as correspondence between you and the landlord confirming the new arrangement(s), or may be more formally attended to by a written variation of the lease, signed by both parties. 

If your lease is registered on the title to the property, a formal variation of the lease may be registered to officially record the variation.

Generally, the landlord will prepare any lease documents, including variations and the like, however, there is nothing to prevent you from offering to do this during your initial discussions.

This is something which can be decided between you and the landlord prior to formal documentation of your new arrangement.

The uncertain nature of the pandemic means it is impossible for anyone to predict its duration. If you are not facing difficulties now, but think that you may in the future, you should closely monitor how your business is performing. 

As soon as you foresee the possibility of any upcoming difficulty with meeting any of your lease obligations, you should initiate an open discussion with your landlord per the above.

Australian Business Lawyers & Advisors answers anticipate that your landlord is reasonable and supportive in getting your business through the COVID-19 pandemic. 

There will be some landlords who do not take a reasonable approach or who have financial issues of their own arising out of the pandemic. 

Such landlords may insist that all lease obligations remain on-foot, and that you must continue to pay rent and other money in full and/or continue to operate, under threat of them stepping in and terminating your lease.  

In those circumstances, we suggest you promptly get legal advice as to any rights you may have.