“My employer has been closed for most of the lockdown and has been forced to cut staff salaries. Although I understand his predicament, it has now placed me in a situation that I can’t pay my rent. I was wondering whether the same applies to my lease agreement and whether I will be excused from paying rent because of Covid-19?”
Although, many sectors have felt the bite of the Covid-19 pandemic, the residential sector has certainly taken its share of knocks. Many tenants like you have found it difficult to pay rentals with pay-cuts, layoffs and loss of income affecting their financial stability. In turn this has affected many landlords with rental income plummeting due to non-payment and in turn affecting their ability to stay up to date with their financing.
So where does this leave tenants and landlords?
A lease agreement establishes a landlord-tenant relationship whereby the landlord provides use and enjoyment of property in return for payment of rental. Should one party breach their obligation to the other, a breach of agreement occurs entitling the innocent party to terminate the agreement.
The question then arises, whether a situation like Covid-19 will excuse a tenant from not paying their rent and accordingly not being in breach of their obligation to pay. Here, the lease agreement itself becomes important to ascertain whether provision has been made for any circumstances under which rental payment may be postponed/delayed/waived. Some agreements, particularly in commercial lease agreements, may cater for a variety of situations that may provide respite to a tenant in respect of rental obligations. However, if the agreement is silent on any such relief which can accommodate the Covid-19 scenario and the tenant cannot prove the common law remedy of supervening impossibility because of Covid-19, then non-payment may amount to a breach of agreement.
Accordingly, if your lease agreement does not provide for any relief, and you know that you are behind/will fall behind with your rental, it is better to approach your landlord and try and negotiate a rental payment holiday or a reduction in rental. For many landlords it will also not be in their interest to now lose a good tenant and they may be open to discussing options that can help provide you relief. In turn, the landlord could also look to obtain a payment holiday from his bank or claim from his insurer for loss of income (should he have such cover) to alleviate the pressure on his side. Either way, it would be a more prudent move to approach your landlord timeously than default on your payments and risk termination of your lease.