Raine and Horne Commercial

17 Commercial Insight July 2020 How are deferred rent repayments implemented? Following the Response Period ending, any deferred rent must be paid over a period of at least 2 years and no more than 3 years. No interest, fees or charges with be payable for the deferred rent, unless the tenant fails to meet conditions of the deferred rent repayments. Landlords can continue to hold any security deposit or bank guarantee until the deferred rent is repaid. If the lease period ends and there is unpaid rent, Landlords can call on the security deposit or bank guarantee in order to meet repayments of the deferred rent. Is an extension of the lease term required? Yes – If there is a rent waiver or deferral period between the parties, the landlord must offer the tenant an extension of the lease period to a period equivalent to the deferral or waiver period. There are exceptions where the landlord is subject to competing commercial obligations. Can the lessor reduce services provided? Yes – If the tenant is unable to operate during the Response Period, the landlord can cease or reduce services to the premises that are reasonable in the circumstances and subject to requests by the tenant. What if an agreement cannot be reached? Parties must try to resolve the dispute cooperatively and in good faith prior to commencing mediation. If agreement does not occur, parties can give notice to the Small Business Commissioner who can either accept or dismiss the dispute (regardless of the dispute resolution process under the lease). A lawyer can only represent a party in certain circumstances. If the dispute is unable to be resolved during mediation, proceedings can be commenced in QCAT (with strict timeframe requirements). What if my agreement does not comply with the Regulation? The parties can “contract out” of the substantive provisions of the Regulation (except for dispute resolution) and existing agreements are not invalid. However, either party is still entitled to seek negotiation under the Regulation. General Comments The core of the Regulation is the need for landlord and tenants to reach agreement. Those landlords and tenants will need to consider what they can “live with” in terms of a negotiated deal over the expected timeframe. The alternatives to negotiated deals include long-term uncertainty, disputes and parties “going under” financially. Wilson Lawyers will continue to assist landlords and tenants reach and record negotiated deals. Important Notice: The information in this article is current as at 5 June 2020. It is for general purposes only and reflects a rapidly changing situation. Consequently, this article is not intended to constitute legal advice. We are constantly reviewing and staying tuned-in to all developments within the commercial leasing area. If you need some advice or guidance, please contact us to see how we can help on 07 3392 0099. Wri en by Julian Creagh, Associate and Sam Rose, Graduate, Wilson Lawyers.