Landlords & Tenants - The FIVE Steps You Need to be Taking Now

Landlords & Tenants - The FIVE Steps You Need to be Taking Now
Posted on 29 Apr 2020

On 24 April 2020, the Queensland Government released the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020 (Regulation) which regulates residential tenancies in Queensland until 31 December 2020, as outlined in the COVID-19 Emergency Response Act 2020.

Residential Tenancies

The Regulations have some retrospective application with certain provisions taken to have commenced on 29 March 2020 in particular, the moratorium on evictions which defines the ‘relevant period’ to be between 29 March 2020 and the earlier of either 29 September 2020 (being 6 months) or the last day of the COVID-19 emergency period.

A link to the Regulation is here: https://www.legislation.qld.gov.au/view/html/asmade/sl-2020-0057

Who does the Regulation apply to?

The Regulation applies to—

(a)  all residential tenancy agreements and rooming accommodation agreements; and

(b)  all tenants, lessors, residents and providers, and their agents, for the agreements mentioned in paragraph (a).

Summary of the Regulation

  • Moratorium of Evictions - Until 29 September 2020 or the last day of the COVID-19 emergency period (whichever is the later), a tenant cannot be evicted for failure to pay rent. However, this is only applicable where the failure is caused by the tenant suffering excessive hardship because of the COVID-19 emergency.

 

  • Extension of Leases - Unless the lease ended before the commencement of the Regulation (being 24 April 2020 for this section), if the tenant is suffering excessive hardship because of the COVID-19 emergency, the lessor must, before the term of the agreement ends, offer the tenant an extension until 30 September 2020 or an earlier date as requested by the tenant.

 

  • Notices to Remedy Breach - Lessors must not give tenants a notice to remedy breach for unpaid rent if they know, or ought reasonably to know, that the tenant is or has been suffering excessive hardship because of the COVID-19 emergency but may give the tenant a show cause notice instead. Should that occur, the tenant has 14 days to pay the rent or inform the lessor the rent is unpaid because of excessive hardship due to the COVID-19 emergency. However, should the tenant fail to do either of those things, a notice to remedy breach may be issued.

 

  • Residency Variation Agreements - If a tenant (within 14 days of receiving a show cause notice) does inform a lessor that non-payment of rent is due to suffering excessive hardship because of the COVID-19 emergency, the lessor may request that the tenant enter into a ‘residency variation agreement’ (see more on this below).

 

  • Rent Reductions - Rent reductions are not mandatory. However, they may be the lessor’s only recourse (via entry into a ‘residency variation agreement’) if a tenant informs them that they are unable to pay rent due to suffering excessive hardship because of the COVID-19 emergency.

 

  • Rental Debt - There is no protection for renters from accruing ‘crippling debt’ (as previously proposed). It will depend on the terms each tenant is able to individually strike with the landlord (under a ‘residency variation agreement’). However, if they are unable to agree, either of the parties can make a request for a conciliation and then an apply to the tribunal for an order if a resolution cannot be reached at conciliation.

 

  • Termination due to Domestic Violence - If a tenant believes he or she can no longer safely continue to occupy a rental premise because of domestic violence, the tenant may end the agreement by giving the lessor a notice in the approved form which provides evidence (i.e. a protection order or doctor’s report).

 

  • Entry - The lessor (or agent) must not enter the tenant’s room if either of them are subject to a quarantine direction, the entry would contravene a public health direction or the tenant refuses entry because they (or another person in the room) are a vulnerable person. However, if the tenant refuses due to there being a vulnerable person in the room, the tenant must allow a virtual inspection, video conference or provide sufficient photos and video.

 

  • Termination due to hardship - Tenants suffering excessive hardship due to the COVID-19 emergency, may apply to the tribunal for early termination of the tenancy agreement but only if they first make a dispute resolution request to the authority and an agreement cannot be reached at conciliation.

 

  • Notice to leave for sale - A lessor may give a notice to leave the premises to a tenant in order to sell the premises but must provide at least 2 months’ notice and, for fixed term agreements, the handover cannot be before the agreement ends.

 

Commercial and Residential - Where to from here?

As with the Code of Conduct for Commercial Leases, the Regulation will likely increase the financial pressure on landlords and the Government is expecting the banks to come to the rescue.

Given that both the landlord and tenant will be experiencing high levels of financial distress, they may be unable to reach fair and reasonable agreements among themselves as there will likely be an ‘every man for themselves’ mentality during negotiations which will likely see the amount of conciliations and hearings before the tribunal increase significantly – which may mean long wait times for a resolution. 

Landlords and tenants will reduce stress by negotiating sensibly and amicably and having the variation agreement properly documented. 

We have set out the five key steps you need to know to navigate these issues properly and maximise a successful resolution, whether you are the landlord, or the tenant:

 

STEP ONE

Firstly, work out whether the particular circumstances and thresholds apply to your lease, and if so, what the principles and protections require.  Those circumstances and thresholds are set out above and in other updates on our Covid-19 Resources page found here: https://croninmiller.com.au/covid-19-resources/.

STEP TWO

Secondly, if the principles and protections apply, the next issue is bringing about the negotiation.   

Here, communication is key.  Landlords and tenants should come to the metaphoric table and work through the financial capacity of the parties, the minimum variations that must be made to the lease according to the principles and protections, the practical implications of the terms and how they affect the parties’ other obligations both to one another and to other stakeholders.  This process should be initiated through the property agent, if there is one.

STEP THREE

Ensure you have adequate representation. It is reasonable to have your lawyer represent you in negotiations, or you can represent your own interests and seek legal advice either:

  • before negotiations, as to what your rights and obligations are; or
  • after the terms are agreed ‘in principle’ but, critically, before they are legally binding on the parties.

STEP FOUR

If an agreement cannot be reached, the parties must utilise the alternative dispute resolution methods available through the relevant government-nominated organisation. 

STEP FIVE

Lastly, if the parties can or have reached an agreement about the variation of terms, it is crucial that the agreement is properly recorded in an agreement that legally varies the terms of the original lease. 

Parties cannot, and should not, rely on a conversation, handshake or exchange of emails or text messages to protect their rights to later enforce the terms of the variation agreement reached.  Most, if not all, leases will require variations to the terms to be recorded in writing and signed by the parties. 

A variation agreement that is poorly drafted, or not recorded in writing and signed at all, will only expose you to disputes and legal costs down the track, so it is important to get this right.

You should consult a lawyer to prepare the variation agreement as if you were engaging a lawyer to draft or review the lease agreement in the first place.  This is the surest way to ensure your rights are protected. 

For simple residential tenancies, it may not be viable to have the variation agreement drafted or reviewed by a lawyer.  To ensure the agreement reached has the best prospects of enforcement, simply stick to the RTA’s new Form 18d - General tenancy COVID-19 variation agreement which can be downloaded here: https://www.rta.qld.gov.au/Forms-and-publications/Forms/Forms-for-general-tenancies.html

For commercial leases or complex residential tenancies, contact a member of our team at Cronin Miller Litigation for guidance.  Dispute resolution techniques are invaluable here and professional assistance is going to maximise the prospects of a commercial outcome.

 

Contact Us

T: 07 5592 6633

E: info@croninmiller.com.au

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