Real Estate Update: Uncertainty Ends – Terminations of Commercial Leases Not Prohibited

The Residential Tenancies and Valuation Act 2020 (the new Act) came into force on 1 August 2020. This new Act primarily deals with residential tenancies and creates various protections for residential tenants. We assessed these extensive changes in a separate and detailed piece here.

The new Act also provides clarity on whether forfeiture or termination of commercial leases or, as the pre-existing law put it, ‘evictions’ were prohibited. The emergency residential tenancies law, the Emergency Measures in the Public Interest (Covid-19) Act 2020 (the Emergency Measures Act), had created uncertainty on this point.

The new Act has deleted the section in the Emergency Measures Act that had cast doubt on the position regarding termination of commercial leases.As a result, it is now clear that termination or forfeiture of commercial leases or ‘evictions’ of commercial tenants are not prohibited.

Commercial landlords are able to terminate or forfeit commercial leases, subject to a valid ground for termination existing and subject to the Landlord otherwise complying with its obligations in relation to such termination.

Comment

It is unclear whether commercial lease terminations or forfeiture were ever prohibited but the earlier emergency residential tenancies law had created enough uncertainty to dissuade many commercial landlords from proceeding with terminations or forfeitures.

Landlords of commercial property will welcome the clarity brought by the new Act on this point. It remains to be seen whether this will result in an increase in commercial lease terminations.

For more information, contact a member of our Real Estate or Dispute Resolution teams.

The content of this article is provided for information purposes only and does not constitute legal or other advice.