Earlier this month the Department of Business, Enterprise and Innovation (“DBEI”) released a voluntary code of conduct (“the Code”) aimed at facilitating negotiations between landlords and tenants impacted by falling revenues and closures of premises due to COVID-19.
The intention of the Code is, according to the DBEI, to promote and reinforce good practice in landlord and tenant relationships as they deal with income shocks caused by the pandemic.
The Code recognises that the COVID-19 pandemic has had significant impacts on many businesses across the country and inevitably, this will have a knock-on effect for many landlord and tenant relationships. On that basis, the DBEI’s position is that it is in the interest of both the landlord and the tenant to see that any difficulties or disputes regarding the payment of rent during the pandemic are amicably settled. The Code aims at facilitating the negotiations in working towards achieving mutually satisfactory outcomes.
Ultimately, the Code contains a list of core principles and guidelines which should be followed where a tenant has sought a renegotiation of rent due to the impact of COVID-19. It also suggests some factors that a landlord should take into account when considering a tenant request of this nature.
While the Code states that it is aimed at both landlords and tenants, it seems that the majority of the guidelines are directed at landlords. The FAQs published with the Code provide that every individual has a duty of care towards other individuals / entities not to act in a way that would cause them harm. The FAQs state that this duty of care should be considered by commercial landlords and tenants, and that any steps that may reasonably be taken to prevent the harm associated with the spread of COVID-19 relating to the occupation, ownership and management of premises should be considered. The FAQs further state that landlords should be willing to do what they can to help their tenants to continue to operate and that tenants should make every effort to pay what they can and communicate when issues arise. Arguably, the Code imposes a greater burden on landlords than on tenants, in what is already perceived to be a pro-tenant jurisdiction. Where disputes over rent result in litigation, we believe that adherence to the Code is something which the Courts might well consider in assessing the conduct of both sides.
That being said, the Code expressly acknowledges that it is voluntary in nature and does not have any grounding in statute. The lease continues to govern the legal relationship between the parties. However, the Code is a useful foundation for starting negotiations or restarting negotiations where parties have reached an impasse.
The Code remains in place until 31 July 2021, at which point, the DBEI will consider whether it should be extended or replaced.
You can download a copy of the Code and the FAQs from the DBEI website (https://dbei.gov.ie/en/Publications/Code-of-Conduct-between-Landlords-and-Tenants-for-Commercial-Rents.html).
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