DO COMMERCIAL LEASE TENANTS NEED TO PAY THEIR RENT DURING THE LOCKDOWN PERIOD? | Legal Legends

THERE IS A GENERAL PRINCIPLE in the Law of Contracts which requires that in instances of supervening impossibility of performance, a party who is prevented substantially from performing in terms of the contract is relieved from their obligation to perform in terms of that contract.

In this regard, if there is a superior force which prevents a person from performing in terms of a contract this will be construed as vis major and regarded as a form of supervening impossibility to perform.

ONE FORM of vis major is casus fortuitus, which is ordinarily defined as an uncontrollable accident or act of God. In this regard, an epidemic such as Covid-19 would in our opinion be regarded as a casus fortuitus event.

If a tenant is able to show that as a result of Covid-19 they do not have beneficial occupation of the leased premises, i.e. do not have access to the leased premises, and further that the epidemic was unforeseen, uncontrollable and the direct result of an inability to perform, they could in theory be excused from performing and paying their rent in terms of the Lease Agreement for the during that access is prevented.

In our opinion, the Covid-19 epidemic, coupled with the government sanctioned lockdown, was unseen, uncontrollable and has directly resulted in landlords being unable to provide beneficial occupation of leased premises which are closed as a result of the lockdown.

Notwithstanding the above, normally Lease Agreements do contain provisions which prohibit any deduction or set-off from the payment of rent. In our opinion, these deductions and set-offs should have been reasonably foreseeable at the point in time when the Lease Agreement was entered into in order for them to comprise enforceable deductions. The Covid-19 epidemic, we believe, was certainly not reasonably foreseeable

FOLLOWING FROM THE ABOVE it is part of our law that the terms of a contract are required not to be against public policy in order that they may be enforceable. In this regard, it is argued that for a landlord to enforce the payment of rental without deduction or set-off in instances where beneficial occupation cannot be provided would be against public policy

FURTHER TO THE ABOVE, the doctrine exists in South African law pertaining to leases, that in instances of there being an impossibility to perform as a result of an interruption of undisturbed use and enjoyment of a particular leased premises, a tenant shall be entitled to a partial or complete reimbursement or reduction of any rental incurred as a result thereof.

AS SUCH, AND IN OUR OPINION, commercial tenants which have been forced to close their offices, factories or other commercially leased spaces during the lockdown period should not in principle be obliged to pay their rental due in terms of the Lease Agreement for the period of time that the lockdown persists.

The above cannot be construed or regarded as legal advice, as individual clauses within a Lease Agreement might vary or in certain circumstances hinder the above. As such, we advise that legal representation be sought.

Top