August 8, 2022

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The Legal System

NSW COVID-19 leasing laws ended but past tenant protections continue – Landlord & Tenant – Leases

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The NSW COVID-19 retail and commercial leasing laws’
‘prescribed period’ ended on 30 June 2022. The laws
themselves
were automatically repealed on 14 July 2022
. This has two
consequences:

  • looking into the future,
    retail
    and
    commercial
    tenants are no longer protected by COVID-19 tenancy
    laws. If breaches, including arrears, occur after 1 July 2022,
    landlords can enforce their rights for those breaches. This
    includes termination

  • it becomes slightly more complicated looking backwards. Parts
    of the COVID-19 laws are ‘saved’ for some past
    occurrences. For arrears accrued during a ‘protected
    period’ before 1 July 2022 (i.e. before the end of the
    prescribed period), the tenant still has the
    COVID-19 leasing law protections
    for those arrears. The most
    recent protected period was from 13 January 2022 until 30 June
    2022.

How the laws will work

A few scenarios illustrate how the changes apply:

  • tenant A has one month’s arrears from a COVID-19 protected
    period (say the February 2022 rent was not paid), and no arrears
    from 1 July 2022 onwards (outside the COVID-19 protected period).
    If tenant A is eligible for COVID-19 rent relief, but there has
    been no COVID-19 agreement or mediation, the landlord would need to
    mediate before terminating. If no mediated COVID-19 agreement is
    reached, the landlord could then terminate. (This only applies if
    tenant A was entitled to COVID-19 protection, such as if the tenant
    was an ‘impacted tenant’. If not, the landlord was never
    restricted in enforcing for pre 1 July 2022 arrears.)

  • next, tenant B has, firstly, one month’s arrears from a
    COVID-19 protected period (say the February 2022 rent was not
    paid), and secondly, tenant B does not pay the August 2022 rent
    when it becomes due (outside the COVID-19 protected period).
    Regardless of whether tenant B was eligible for COVID-19 relief in
    March 2022, based simply on the August 2022 breach, the landlord
    can enforce (including terminating) for not paying the August 2022
    rent. There may be an issue about whether the landlord’s loss
    calculation needs to give some discount for any COVID-19
    entitlements the tenant had, but the lease can still be terminated
    or enforced

  • finally, tenant C has no arrears from the COVID-19 protected
    period but does not pay the August 2022 rent when it becomes due
    (outside the COVID-19 protected period). Regardless of whether
    tenant C was ever eligible for COVID-19 relief, based on the August
    2022 breach, the landlord can enforce (including terminate) for not
    paying the August 2022 rent.

These scenarios give the basic application. Individual cases may
raise other issues, such as if the landlord is in breach for not
giving past COVID-19 relief affects the landlord’s right to
terminate – which will depend.

What to look out for

The following checklist may assist landlords considering their
next steps:

  • are there pre 1 July 2021 arrears?

  • was the tenant an impacted lessee before 1 July 2022?

  • are there are any post-regulation arrears (i.e. post 30 June
    2022)?

  • is there a documented COVID-19 relief agreement which the
    tenant has breached, giving the landlord an enforcement right?

With the prescribed period receding, things should slowly become
less complicated.

This publication does not deal with every important topic or
change in law and is not intended to be relied upon as a substitute
for legal or other advice that may be relevant to the reader’s
specific circumstances. If you have found this publication of
interest and would like to know more or wish to obtain legal advice
relevant to your circumstances please contact one of the named
individuals listed.

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