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Amendment in tenancy deals requested by Property Owners after disputes over payment of new 'lockdown' provision arose.

Team SoOLEGAL 19 Jun 2020 3:21pm

Amendment in tenancy deals requested by Property Owners after disputes over payment of new 'lockdown' provision arose.

In light of the nationwide lockdown implemented by the Government as a preventive measure to curb the spread of COVID-19, the nation has phased its fair share of loss. Amidst this situation the Owners/Landlords have accordingly taken a step to revise their agreements with their tenants/franchisees to include a clause dealing with the situation of Lockdown as well and to safeguard their interest.

The new clause inculcated in rent agreements by the Lawyers on the request on Property owners clearly state that there would be in the case of lockdown unless, the Owner and the Tenant exclusively and mutually decide upon a certain reduced amount to be paid by the Tenant in such phase.

 The proposed plans are being drafted with respect to both residential and commercial properties, as a clarification is sought but owners and tenants of all types.

The lockdown clause has acquired importance as a force majeure clause a common element in any contract that essentially relieves both parties of liability or obligation when an extraordinary event or circumstance occurs beyond the control of the parties does not mention a lockdown or pandemic.

After bringing the nation into a shutdown late in March, suspending almost all economic operation for nearly two and a half months, tenants started defaulting on rent payments. When landlords made requests, disputes ended up in court, endangering years of business relationships

To date, Advocate Prakash Rohira, who specializes in real estate, has drawn up at least ten revised lock-down / pandemic agreements eight for commercial property and two for residential properties. He said that while owners are willing to offer a waiver in commercial properties, owners of residential properties want it made clear that under any circumstances there will be no waiver of rent.

DB Legal 's lawyer Utkal Deshmukh said they have received many requests for the inclusion of the pandemic as a force majeure clause in their future contracts, especially from tenants. He said, “the pandemic as a clause will be case-specific, as it will have different implications for different parties and contractual obligations, subject to the agreement between them”.

Trivankumar Karnani, an attorney who practises at the Bombay High Court, said courts will end up hearing many cases of violations of rent agreements.“The lockdown disrupted the business of renting real estate. It's no surprise that both landowners and tenants are now looking for a remedy. And the solution is a reframing of a force majeure clause contracts.”



Tagged: Amendment   lockdow   COVID-19   pandemic   Advocate Prakash Rohira   lawyer Utkal Deshmukh  
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