The advent of Covid-19 has led to a series of measures taken by the Government of Cyprus, announced on Sunday, 15 March 2020. These measures resulted in the temporary closure of a number of businesses, with the aim of reducing the rapid spread of Covid-19.
In this article we examine the impact of the measures taken by the Government on retail businesses who rent (rather than own) their premises and have to temporarily stop serving the public from 16 March until 13 April 2020, and in particular questions frequently asked by tenants in this situation.
Generally, one ought to take into account that, as in most similar landlord and tenant situations, regardless of the rights or obligations either party may have, temporary amendments may still be achieved as a result of negotiations between the parties. It is in unfortunate situations such as these that a good landlord and tenant relationship is paramount in achieving an agreement that is palatable to both parties.
The circumstances of each individual tenant and, in particular, the terms of their tenancy agreement must be taken into account as they may regulate for certain situations and have an impact on the outcome.
Am I entitled to stop paying rent for the above period?
The very essence of a tenancy agreement is the payment of rent and, as such, it one of the most basic obligations of a tenant. As there is a real prospect that the tenancy will continue to run after 13 April 2020, it is very doubtful that a tenant is entitled to unilaterally stop paying rent on the basis of force majeure or impossibility of performance due to the Government's temporary measures which last for about a month.
Can I argue that my tenancy is frustrated as a result of the implementation of the measures by the Government?
Such an argument could reasonably form the basis of a negotiation either for a temporary suspension of the obligation to pay rent or for a temporary reduction of rent. However, in light of the relatively short period of closures compare to the length of the tenancy agreement and the temporary nature of the measures, a Court is unlikely to accept that these measures allow a tenant to successfully argue that the tenancy is frustrated and discharge them of all the obligations for the rest of the rental period.
Can I claim a reduction in rent from my landlord?
Once again this could form the basis for a negotiation between the tenant and the landlord. Yet unless the landlord is willing to discuss such a reduction, he would not be under any obligation to concede to such a reduction.
Does my landlord have to act in good faith in any discussions?
The very concept of good faith within a contractual setting is always a relative one and largely depends on the surrounding circumstances of each agreement. In most cases, this concept would not be an insurmountable obstacle to a landlord who insists on the performance of the tenancy agreement without amendments.
My shop is in a shopping mall. Do I still need to contribute to common expenses while my shop is closed?
The contractual obligation to pay rent is usually linked within the same tenancy agreement with the obligation to pay common expenses. Thus, the contribution to common expenses will still be binding even though, of course, the actual amount of common expenses during the closure period may well be reduced due to practical rather than legal factors.
19 March 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.