The Minister for Economic Development, Tourism, Sport and Culture has published Guidance relating, principally, to rent and other payments to be followed by Landlords and Tenants of Commercial Property during the 'COVID-19 Period'. The Guidance applies to any lease, tenancy, or other agreement which provides for the occupation of commercial property.
The Guidance was developed at the request of The Government of Jersey by a Law Society Property Working Group, which included John Bisson from Appleby. The Guidance is intended to "...promote good conduct and reasonable behaviour from both landlords and tenants during the COVID-19 Period, by seeking to minimise interference in the normal contractual relationships between Landlords and Tenant, but promotes the need for flexibility and pragmatism to be shown in exceptional times like these".
The full details of the Guidance for commercial property have been published on the Government of Jersey website, click here to view.
The Guidance is separate to the temporary legislative amendments and related Guidance issued in relation to residential property.
The guidelines for both commercial and residential property come into immediate effect and will last throughout the 'COVID-19 period', which has, at least initially, been determined to be to 30 September 2020.
Unlike the residential Guidelines, the commercial property Guidelines are not backed by regulation as there is no statutory framework governing commercial leases. The Guidelines do not impact the validity of obligations on either party contained within a commercial lease, which will retain full contractual force.
The Guidance establishes a protocol for a tenant to provide written notice to the landlord of any anticipated difficulty in paying sums or complying with lease terms of a material nature, supported where requested, by evidence of its financial hardship. On receipt of such notice, the Guidance sets out a series of potential concessions which a landlord may grant, including partial and complete deferrals and waivers and even early termination of the lease. Similar provision is made for the eventuality of a landlord being unable to meet its obligations to its tenant. Any agreed concessions are to be formalised in a contractually binding Temporary Voluntary Arrangement. The Guidance, together with professional advice where necessary, should assist landlords and tenants of commercial premises navigate these exceptional and unprecedented circumstances.
The Guidance sets out the overriding principle that each party to a commercial lease should act in an open, transparent and reasonable manner in meeting the expectations set out within the Guidance. Whilst the Guidance is advisory, applies on a voluntary basis and, as above, does not impact the validity of existing obligations within a commercial lease, the Courts will be entitled to take into account the conduct of both Landlord and Tenant in any future proceedings relating to rent arrears, lease cancellations and consequential orders for possession and eviction, although the Guidance notes that the Government '...hopes that litigation in relation to Leases will only be required as a matter of last resort'. Furthermore, action taken or not taken by the landlord and/or the tenant may be used if either of them applies for any financial support packages introduced by the Government.
It is expected that the Guidance will be supplemented by practice directions issued by the Court. We will provide a further update once those practice directions have been issued.
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.
