South Australia has enacted the COVID-19 Emergency Response Act 2020 (the Act) 1 to adopt a number of the principles set out in the Commercial Leasing Code of Conduct 2 previously announced by the National Cabinet.
The Act applies to commercial leases (including retail shop leases) within the meaning of the Retail and Commercial Leases Act 1995 (SA).
The provisions of the Act will apply from 30 March 2020 until the earlier of
- the day on which all relevant declarations relating to the COVID-19 pandemic within South Australia have ceased, or
- 9 October 2020.
How Does the Act protect Lessees during COVID-19?
The Act protects lessees in a number of ways:
The Lessor Cannot Take Action Under the Lease
If a lessee is suffering from financial hardship as a result of the COVID-19 pandemic, a lessor cannot take any prescribed action for failure to pay rent, failure to pay outgoings, or failure to open for the hours specified.
Action (which is not finalised) will be Stopped
If a lessee is suffering from financial hardship as a result of the COVID-19 pandemic, and the lessor has already commenced any prescribed action against the lessee, but that action has not been finalised, then the action is to be suspended.
The Lessor cannot increase Rent
If a lessee is suffering from financial hardship as a result of the COVID-19 pandemic, the lessor must not increase the rent payable under the lease (unless the lessor and the lessee have otherwise agreed).
What is financial hardship?
Under the COVID-19 Emergency Response (Commerical Leases) Regulations 2020, a lessee is taken to be suffering from financial hardship if it is eligible for the federal government’s JobKeeper Payment Scheme in respect of the lessee’s business.
For further information about the federal government’s JobKeeper Payment Scheme click here.
What is prescribed Action under the Act?
Prescribed action includes:
- evicting the lessee from the premises;
- exercising a right of re‑entry to the premises;
- recovering land;
- distraining goods;
- seeking damages;
- requiring payment of interest on unpaid rent;
- recovering a security bond;
- requiring the performance of obligations under a guarantee;
- taking possession of the premises; or
- terminating the lease.
What about the other principles under the Commercial Leasing Code of Conduct?
The Act does not legislate all of the principles set out in the Commercial Leasing Code of Conduct.
The implementation of the full range of principles set out in the Commercial Leasing Code of Conduct is still being considered in South Australia.
Call Us on 1300 830 830 if you require any advice or assistance in relation to negotiating or implementing any amendments to a Lease
The information in this article is general in nature and is not intended to address the circumstances of any person or other entity. Although we do our best to provide timely and accurate information, we do not guarantee that the information in this article is accurate or that it will continue to be accurate in the future.
- Posted by Ana Haarsma
- On April 29, 2020
- 0 Comments