Commercial Lease Agreement During Covid 19


The amendments are intended to assist commercial lenders, tenants and borrowers through the COVID 19 situation. They help businesses remain solvent by the pandemic that will support New Zealand`s economic recovery. They are part of a broader state aid plan. In practice, the doctrine of frustration generally applies to a commercial lease when a property has been destroyed by a fire or earthquake or where the specific authorized use identified in the lease or the intended use of the protected space after the lease comes into force is in accordance with local laws or regulations. For example, it was found that the doctrine of the application of economic frustration was that a tenant entered into a lease agreement for the operation of a cinema and that, subsequently, the applicable shingle was amended to prohibit the operation of a cinema there. Due to the modification of the zoning, the lessor was unable to perform any of the proposed transactions. [9] Depending on the specific situation, the lease may be terminated or the payment of all or part of the rent may be excused. Most modern commercial leases provide for rent without deduction or sale. In these circumstances, it is unlikely that a tenant will be able to withhold payment of rent for coronavirus-related reasons, unless a particular provision of the tenancy agreement permits it or it is not possible to reach an agreement with the lessor.

This part focuses on the scenario whereby a lease contains a force majeure clause. Most commercial leases contain a force majeure clause, although they are indicated differently. Some force majeure clauses may contain a list of specific events (usually acts of God, such as serious acts of nature or weather events such as floods, fires, earthquakes, hurricanes or explosions; war, terrorist acts and epidemics; acts of government authorities, such as expropriation, condemnation and changes to laws and regulations; Strikes and labour disputes; accidents[3]), which are cases of force majeure. Some may be described more generally to include anything outside the proper control of the parties or that force majeure events „include several specific events, but are not limited“ and then contain a broad „catch-all“ language as „or any other event outside the party control area.“ June 15, 2020. However, the courts restrictively establish the force majeure provisions and often insist that the event that led to the suspension or termination of the contract is directly related to one of the defined events.