Can rent be recovered under the COVID 19 Act 2020

COVID-19 Act came into operation from October 23, 2020 and shall continue to remain in operation for some time except where the date of commencement and period of operation have been provided in respect of the respective Parts in this Act.

CONTRACTUAL DUTIES

Section 7 of the COVID-19 Act prevents another contracting party (landlord/ lessor for non-residential immovable property) from exercising its contractual rights under the lease or tenancy agreement against the party experiencing such inability to perform.

That is to pay rents pursuant to the lease or tenancy agreement between March 18, 2020 to December 31, 2020 (extended by the Federal Gazette and notified that the operation is extended for the period from January 1, 2021 to March 31, 2021) provided that no action has been taken by the landlord/ lessor before 23rd October 2020.

EXTENSION OF THE COVID 19 ACT

Under Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 P.U. (A) 386, the operation of Part II of the Act is extended for the period from January 1, 2021 to March 31, 2021. This extension was made on 29th December 2020, click here for the amendment act.

Sections 29-31 of the COVID-19 Act modified the Distress Act 1951 to suspend the rights of lessors/ landlords to distrain for the arrears of rent for the period from March 18, 2020 to August 31, 2020 (“Moratorium Period”) until December 31, 2020 and lessors/landlords are entitled to commence distress actions from January 1, 2021 onward to recover the outstanding rent during the Moratorium Period.

Although section 7 and sections 29-31 of the COVID-19 Act seem contradicting to each other, my view is that section 7 specifically applicable to non-residential immovable property and sections 29-31 included both residential and non-residential immovable property.

NON RESIDENTIAL PROPERTIES

In my humble opinion, if the only issue in question is whether the outstanding rent between the period March 18, 2020 to December 31, 2020 (now extended to March 31, 2021) from a tenant for a non-residential immovable property is recoverable or not now? My answer would be no, it is not recoverable. An action cannot be taken. Once the landlord takes an action, counter measures will be launched.

RESIDENTIAL PROPERTIES

For residential properties the doors are now open to recover the rent.

The caveat is that, the inability of a party to perform the contractual obligation is due to the measures prescribed, made or taken under Prevention and Control of Infectious Disease Act 1988 [Act 342] to control or prevent the spread of COVID-19.

Lim Wen Mi
January 10, 2021