30.04.2020 at 23:53
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Radical changes to commercial and retail leases in Victoria

The states are closely monitoring each others’ responses to the corona virus crisis so what happens in Victoria is significant for the country as a whole.

The Victorian Parliament has passed the COVID-19 Omnibus (Emergency Measures) Act 2020 and it  makes extraordinary changes to the  laws relating to retail leases and non-retail commercial leases and licences. The most extraordinary change is that leases can be now be modified by regulations made by the government.

Which leases are included under the Act?

An ‘eligible lease’ under the Act is defined in section 13 as one that is in effect on the day the first regulations made come into operation and one in which the tenant is an SME entity and an employer who qualifies for and participates in the jobkeeper scheme. However, there are some exclusions. A retail lease or a non-retail commercial lease or licence is not an ‘eligible lease’ if any of the following apply:

  • the tenant is a member of a prescribed group of entities, and the aggregate turnover of that group exceeds $50 million;
  • there is a relationship or connection between the tenant under the lease and another entity that is prescribed, and the aggregate turnover of the tenant and the other entity exceeds $50 million; or
  • an entity has a prescribed method of control or influence, through the holding of a prescribed interest, right or power, in relation to acts or decisions relating to the ownership, management or affairs of a tenant under the lease that is a body corporate.

What are the potential modifications?

The Act provides that the Governor in Council can make regulations on the recommendation of the Minister for Small Business with respect to the following matters:

  •       prohibiting the termination of an eligible lease;
  •       changing any period under an eligible lease;
  •       changing any period under regulations made under certain listed Acts (including the Land Act 1958, the Retail Leases Act 2003 and others) in relation to an eligible lease that states someone must or may do something;
  •       changing or limiting any other right of a landlord under an eligible lease;
  •       changing or limiting any other right a person, who is a landlord under an eligible lease, has under an agreement related to that lease;
  •       exempting a landlord or tenant under an eligible lease from having to comply with an eligible lease or an agreement related to that lease;
  •       modifying the operation of an eligible lease or an agreement related to it;
  •       modifying the application of certain Acts, regulations or the common law in relation to an eligible lease;
  •       extending the period of an eligible lease;
  •       imposing new obligations on landlords or tenants including requiring them to negotiate amendments to an eligible lease;
  •       requiring landlords and tenants to participate in mediation to resolve disputes about terms of an eligible lease; and
  •       requiring mediation before commencing proceedings in VCAT or a court in relation to a dispute.

Any regulations made under the Act can apply retrospectively to 29 March 2020 but will automatically cease six months after the commencement of the Act.

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