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Property Law Amid COVID-19

Do landlords or tenants have any obligation to report the virus (to each other) under their lease?

Commercial Properties

Landlord’s Obligations -
  • It is generally more common in a commercial circumstance for the landlord to own/manage the entire facility rather than just individual units. In this case should one of the units within a multiple unit facility have a confirmed case of COVID-19, the landlord would be under an obligation to inform all tenants and to subsequently close the entire premises and disinfect same.
  • The landlord would further be under an obligation to inform the authorities given the situation with COVID-19.
Tenant’s Obligations -
  • The tenant in this instance would be under an immediate obligation to close his store and also immediately notify the landlord.
  • The tenant would also need to ensure that the people (staff and visitors) present in the store at the time and even over the last fortnight were notified of the case and their identities (if known) would need to be brought to the attention of the landlord so that necessary arrangements can be made to have their identities disclosed to the relevant authorities for necessary steps to be taken.
Residential Properties:

Landlord’s Obligations -
  • The landlord would be under an obligation to inform any potential tenants that there was recently a case of COVID-19 either in the building and most importantly, if it was located in the residential unit immediately prior to the potential tenants occupation, should the landlord have been aware thereof.
  • Should the Landlord be aware of COVID-19 in the building and have a current tenant, they should also notify this tenant thereof. This however, is unlikely to be an established duty of care that the landlord owes a current tenant to the same level as he would be obliged to disclose it to a new tenant.
Tenant’s Obligations -
  • The tenant would be under an obligation to notify the landlord in the event the tenant is vacating the premises, or if the landlord will be visiting, or in the case of routine maintenance required, whereby the landlord would arrange for same. The tenant would have an obligation to advise any visitors to the premises that there is an incident of COVID-19 on the premises.
What rights do tenants have where a landlord decides to close down the building to prevent the spread of the virus?

Commercial Properties:
  • Should the closure be government-mandated, then there is nothing the tenant can do but to comply, such as in the current case where the UAE government has announced the forced closure of malls to prevent the spread of COVID-19, however, the tenant can claim force majeure as a defense against the payment of rent to the landlord due to the landlord’s impossibility of performance.
  • Should the closure be enforced by the landlord, it is likely the tenant would be able to challenge this decision of the landlord, and should rental be claimed by the landlord, the tenant may be able to claim non-performance of the landlord in terms of the contract to have a reprieve from payment of the rent for any period that the tenant has not had access to the premises.
Residential Properties:
  • A tenant can challenge any such directive from the landlord to close any residential premises and the landlord will not be permitted to restrict entrance by tenants to their residential units or evict tenant from their apartments for this reason.
  • The landlord (if he had right to do so such as in the case the landlord owned the entire building) could restrict visitors and non-residents from entering the building for non-essential reasons and the tenant would not be able to challenge this decision.
What rights do landlords have where a tenant decides to “close up shop” in order to prevent the spread of the virus?
  • In the event that a tenant elects to “close up shop” on his own accord, the landlord will still have a claim for rent and the tenant would not be able to use force majeure as a defense to the claim for rent, unless the tenant can prove that when applying an “objective test” to the circumstances, a reasonable person would also have made such a decision due to the threat or risk of contamination of the tenant or the tenant’s employees.
  • Where the landlord has a claim for “turnover rent” and the tenant does not conduct business in accordance with the provisions of the tenancy agreement, such as being open for certain hours, etc., then the landlord would have a claim for damages to the extent of the landlord’s lost income based on the reasonable anticipated turnover of prior turnover records.
Authored byHead of Indirect Tax and ConveyancingJohn Peacock

BSA in collaboration with LexisNexis
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