Commercial Property Obligations-Covid Affected or otherwise

Whilst we have been overwhelmed with information about COVID and its impact on our daily lives, many commercial property owners, their agents and tenants seem oblivious to their legal obligations in the event of a sale, lease or sub-lease of their commercial property.

The seller of a commercial property, which is subject to a lease, will invariably enter into the REIQ commercial contract which has been endorsed by the Queensland Law Society.

Unfortunately, most sellers and their agents have scant regard for the terms of contract.

In particular, clauses dealing with assignments of covenants and warranties, bonds, commercial tenancy provisions, commercial tenancy warranties as contained in the contract place strict obligations on the seller.

For example, if a commercial contract does not disclose that the current tenant is in arrears of rent or has not paid a bond or is in breach of the lease in some other particular, the buyer may rely on that inaccuracy to terminate the contract.

Tenants must be aware that they have no right to assign or sub-lease their premises unless they obtain the landlord’s consent. To proceed with an assignment or subletting of premises without the landlord’s consent is a breach of the current lease and could impact on the tenant’s ability to continue to operate from those premises and could well lead to the tenancy being terminated by the landlord.

Whilst a rent reduction enjoyed by a tenant as a result of COVID is not technically a breach of the lease, most buyers of commercial properties will undergo due diligence investigations and if the tenant has been granted COVID relief the buyer invariably will not proceed with the contract. There is no standard term in the REIQ Commercial Contract which allows this, however, most Commercial Contracts now contain a specially drafted condition which would allow a buyer to terminate the contract if due diligence investigations are unsatisfactory.

If you have any queries in relation to your obligations as owner, landlord, tenant or sub-tenant, we are able to assist you with your enquiry.

By Gary Hutchinson|2020-09-16T15:36:34+10:0016/09/2020|Commercial|

About the Author: Gary Hutchinson

Gary Hutchinson has been a Legal Practice Director of Cooke & Hutchinson Lawyers for 35 years, having been in partnership with his brother, John Hutchinson, from 1978 to 2005 and, since 2007, with his son Daniel. He was admitted as a Solicitor of the Supreme Court of Queensland in 1975 and was later admitted as a Solicitor of the High Court of Australia in 1991. He has also acted as a Senior Counsellor of the Queensland Law Society since 1994. Gary moved to the Redcliffe Peninsula in 1977 and has developed a wealth of experience in all areas of law. He now dedicates himself exclusively to his large client base of investors, institutions, large tenants and developers in the areas of commercial law as well as business advice and property transactions. Gary has an established client base of: – small business operators; – franchisees; – landlords and tenants; – developers; and – local government. Gary has also played an important role in a number of strata title developments in recent years, including the Ballycara and Peninsula Park retirement villages. Most recently, he had a crucial role advising on the development of the exciting Dolphins Central shopping precinct at Dolphin Oval as well as the North Lakes Central development at North Lakes. Gary is passionate about his community and is committed to protecting his clients’ interests and obtaining the best possible outcomes for them. His long term dedication to the peninsula and its people has led to numerous long term client relationships and a local reputation that is second to none. Gary takes enormous pride in the reputation of our firm and is committed to ensuring Cooke & Hutchinson continue to provide the highest standards of service to all their valued clients.