2 June 2020 | Reading time: 2 minutes
On 15 May 2020, the South Australian Government introduced the COVID-19 Emergency Response (Commercial Leases No 2) Regulations 2020 (SA) (Regulations). These Regulations give effect to the National Cabinet’s mandatory Code of Conduct for commercial leasing (Code) and coincide with the COVID-19 Emergency Response Act 2020 (SA) (Act).
The Regulations apply from 30 March 2020 to 30 September 2020 (prescribed period) and
implement temporary protection measures for parties of commercial leases experiencing unprecedent circumstances brought about by COVID-19.
Who do these Regulations apply to?
The Regulations apply to ‘affected lessees’ of commercial leases, who have a business turnover of less than $50 million and suffered from financial hardship due to COVID-19.
A lessee will be suffering from ‘financial hardship’ if they are eligible for, or receiving, JobKeeper in respect of its business.
Protections for ‘affected lessees’.
The Regulations prohibit a lessor from taking ‘prescribed action’ against a lessee, if it breaches the lease by failing to:
‘Prescribed action’ includes:
In addition, lessors are also prohibited from:
Negotiations for rent relief.
Parties to the lease are now required to negotiate, in good faith, the amount of rent payable, having regard to:
What information can be shared during the negotiations?
During these negotiations a lessor can ask for the following information from a lessee:
A lessor is not entitled to seek financial information from the lessee as follows:
Formalising revised rent.
Any commercial agreement reached between the parties should be carefully documented by way of a Deed of Variation to ensure it is binding between the parties and their successors.
The Deed of Variation should include provisions regarding:
We can help.
If you are in the process of renegotiating your lease, we can help you navigate this process in line with the Regulations, and assist you to draft a Deed of Variation which covers all of the important points listed above.
For details of all of our COVID-19 tips and updates, visit the Bespoke COVID-19 Hub.