Landlords and tenants – Frequently asked questions

Here is guidance relating to rent and other payments for landlords and tenants of Jersey commercial property during the COVID-19 crisis.

Purpose of this guidance

Court applications for rent arrears, lease cancellations and consequential orders for possession and eviction (“Tenancy Disputes”) are currently unlikely to be heard as a result of the COVID-19 pandemic and the related Government of Jersey measures to manage the risk of contagion within the Island.  Proceedings in the Petty Debts Court have been adjourned and the Royal Court has issued guidance that it will only determine urgent civil (and certain children and criminal) cases, which would not include Tenancy Disputes.

Templates to help you negotiate with your landlord

The templates below have been developed as part of the guidance to help you talk constructively and proactively with your landlord:

For the commercial tenant to use:

Notification of tenants financial hardship

Notification of tenants inability to comply with lease obligation

For the commercial landlord to use:

Notification of landlords inability to company with lease obligations

For both tenant and landlord to confirm the terms of their Voluntary Arrangement:

Letter of Agreement for voluntary agreement during COVID-19

Apply for commercial tenancy advice

If your business is being affected by COVID-19 and you need help negotiating with your landlord then please complete the commercial tenancy advice application form below.

This advice, which is for commercial leases, can cover issues such as how to demonstrate a change of circumstances, template letters, how to negotiate new arrangements etc.

Apply for commercial tenancy advice

These frequently asked questions might help you…

The Guidance note says its unlikely that Courts will hear COVID-19 pandemic related applications. Can you explain what you mean by unlikely?

The Court is only likely to sit to hear cases where people’s health is being put at risk by the actions or inactions of landlords or tenants. For example, if there was a gas leak at a commercial premises, which put neighbouring properties at risk as well as the tenant, this would be considered urgent and likely to be heard during COVID-19. Or if there was a flood or escape of water likely to damage the fabric of the property or increase the risk of disease, which the tenant did not urgently repair when it was its obligations under the lease, again this type of application would be likely to be heard.

I’ve heard that the courts won’t allow evictions during Covid, but if my landlord won’t agree deferral with extended repayment terms, will they be able to evict me as soon as Covid is over unless I pay the full rental for the period immediately (which I won’t have the cash to do)?

No, you should stay put and try and get a repayment plan in place for your missing rent. If you have followed the steps of giving written notice and documents to show your financial hardship to your landlord, which are set out in the Guidance under the Tenant’s Obligations, you will have acted reasonably. To evict you the landlord has to take the matter to Court. The Court will look at the facts, how you and the landlord have behaved and will use this Guidance as a means of determining what orders it should make.  Courts are generally reluctant to evict tenants unless they have good reason to do so.

I have already changed my arrangements with my landlord, do I need to do anything retrospectively?

Not necessarily. Check you are happy with the arrangements you have agreed with your landlord and any payments you have agreed to pay during COVID are manageable. If they are fine, you can simply leave these in place. If you think they put too much financial stress on you and you are likely to fail to meet the payments required under these new arrangements, use this Guidance and the steps you as a tenant are to take under them to advise your landlord a new arrangement is required.

Have tried to contact my landlord to discuss the lease but there has been no reply. Can I just stop paying the rent?

No, you must write to the Landlord for your landlord to agree any period for not paying the rent. You should only do this if you cannot afford the rent and can show you are suffering from financial difficulties. The Guidance tells you what steps you should take and how the landlord is required to act in response.

My landlord isn’t responding at all to my approaches to defer rental, what should I do?

Are you suffering from financial difficulties? Have you written to your landlord to tell him about your financial difficulties? Are you still paying rent? When is your next rent due, have you given 7 days’ notice of your financial difficulties? The Guidance sets out the steps you as a tenant need to take if you are to be given the protection of the Court later when any dispute arises. The same Guidance sets out what a landlord is required to do.

My landlord won’t consider any reduction or deferral in rent, but I don’t have sufficient income during Covid-19 to cover the costs, what should I do?

Have you approached the landlord in writing giving documents to back your claim of insufficient income? Are you still paying rent, when does your next rent payment come up? Have you given your landlord at least 7 days’ notice in writing that you are unable to pay? Are you able to pay a lower sum? Have you offered this to your landlord? Do you think you will be able to cover the missing rent payments in the future? Is your business likely to recover? Has your landlord told you it is in financial difficulty itself? If not, a landlord is obliged to offer certain temporary arrangements for tenants, like yourself, in financial difficulty. These options are set out in the Guidance, it does include termination of the lease if that is appropriate to a tenant’s present and likely future circumstances. You will need to consider the options your landlord offers and decide whether to accept it. If you have followed these steps and all other steps a tenant is to take under the Guidance you will be offered the protection of the Courts later in a rent dispute.

I am worried that my business may never recover or return to normal trade and I won't be able to pay the rent? How can I exit the lease in this case?

The Guidance requires a landlord to consider releasing its tenant from the lease if their financial circumstances make this the most suitable option. If your landlord offers you this option, and you accept it, you and your landlord will sign an agreement which records this position. This agreement will free you from any future duty to pay rent or meet other duties under the lease. It will not release you from any duties you owed before this agreement was signed.

Do I have to prove to my landlord that I am in financial difficulties?

You must provide reasonable evidence to show you are in financial difficulties. The Guidance suggests a cash flow statement for your business, the latest bank account statements for your business and an explanation as to how your business has been affected by COVID are likely to be needed. Your landlord can ask for extra information or different information if it is relevant to your financial circumstances, for example, if a third party guaranteed your rent you would need to how this person was unable to pay too. Any information the landlord requests must be reasonable in the circumstances.

My landlord will only defer rental for 1 month and also won’t allow me to repay this over an extended period

It may be that your landlord cannot afford to offer you more than this. Has your landlord told you it is in financial difficulties and sent you evidence to show this? The landlord has to follow the steps under the Guidance if it wants the assistance of the Courts in later seeking recovery of any unpaid rent. A landlord is not obliged to offer you a full deferral of rent if your circumstances do not show it to be necessary. Have you provided your landlord with documents, such as a cash-flow statement and your business’ last bank statement to show what your financial position is? As a tenant you are obliged to show financial hardship to be offered any temporary rent arrangement by your landlord under the Guidance.

I cannot trade or cover rental during Covid but don’t know how long to ask for a deferral of rent from my landlord?

Be sensible. Let your landlord know your circumstances and what you think a sensible period will be for repaying your missing rent. Are you confident your business will recover once the COVID restrictions are over? Can you pay something towards your rent now, so you will have less to pay back once COVID is over? Try and work out a budget of your likely expenses during COVID and check what customers still owe you money and what debts you need to pay. Are you getting help from the Government pay-roll scheme for your employees? Can you cut back on any costs? If you do agree a temporary voluntary arrangement with your landlord which you find is still difficult to meet, you can always let your landlord know, and see if it can be changed. Just be sure to be open and transparent with your landlord about your financial circumstances. If you aren’t you are likely to be penalised later by the Courts in determining what order it should make for the repayment of rent.

My landlord and I have agreed deferral of rental, but do we need to get this documented and if so, does this have to be via lawyers?

It does not need to be done via lawyers. It is for you to decide whether you need help from lawyers. The temporary voluntary arrangement agreed by you with your landlord can be put into a very simple document provided the arrangement you agree is simple. Jersey Business will be offering a simple template for landlords and tenants of commercial property to use.

Will my insurance to cover my rent?

It is extremely unlikely but do check your policy.

Can I walk away from my lease arguing a Force Majeure event?

No. You may be able to agree with your landlord that you are released from your lease if you follow the steps under the Guidance. It will be essential you can show financial hardship and that this financial hardship will carry on after COVID-19 so that your business is likely to be insolvent. A landlord does not have to offer you this option, but will need to consider it if it is not suffering financial hardship itself which it has told you about and given you evidence to support this claim.

Is there any mediation service available to me?

Check the terms of your lease. There may be a clause which offers mediation. A mediator will still have regard to the Guidance so check you have followed the steps set out in this Guidance before calling on this option.

I had to close my business in March can I apply the new tenant guidelines from 16th March?

No, the Guidance relates to situations that arise during COVID-19. If you closed your business in March this indicates your circumstances had changed before then. If you owed rent before the COVID restrictions or lock down started, you will still be obliged to pay this sum owing under the lease as well as any other amounts you owe for duties you owed under the lease before COVID-19. If you continue to be a tenant despite your business having closed down, you can use the Guidance to agree a voluntary arrangement with the landlord for any rent which becomes due after the COVID period started. The landlord may decide it is better to terminate your lease but you will still owe the landlord any unpaid rent or sums due under the lease immediately prior to its termination. The landlord is not obliged to release you from your lease but if it does not it will need to offer one of the other options under the Guidance.

When the Covid lockdown is over will we revert back to normal commercial lease agreement or will the Government's Guidance Relating to Rent still apply?

The Guidance will only apply in so far as any Voluntary Agreement you agree as landlord and tenant remains in place and the Courts will enforce its terms. After COVID-19 is over, both landlords and tenants will need to comply with the terms of their lease, including the tenant paying all rent payable under its terms.

Will I be able to take advantage of this new Government Rent Guidance after the Covid 19 crisis is over if I have trading difficulties?

No. The Guidance does offer sensible practices so will still offer tenants and landlord a pragmatic approach to such matters. The landlord will be under no obligation however to offer you any rent deferral or other arrangement.

I sublet part of a building, but my landlord has stopped me from working there during Covid. What should I do?

Keep a record of when you were stopped entry. If the landlord said it was due to Government restrictions, decide if those restrictions should properly have restricted you from working in the building and whether arrangements could have been made to enable access and use of the building safely. Did the landlord offer you any rent reduction or rent holiday? Keep a record of what the landlord said and how you responded. This may be useful as later evidence in Court if you can show the landlord wrongly stopped you from occupying the building and you wish to bring a claim for damages.

It appears that a tenant will only get protection from the courts if a Voluntary Agreement is in place? Can you please confirm if this is the case and what happens if the Landlord does not agree or delays this agreement?

That is not strictly the case. The Guidance is there for the Court to use when a later dispute arises between a tenant and a landlord. The Court has a wide discretion and can offer protection to a party where the circumstances require it. The Guidance simply establishes an expectation that where a party has followed its steps, the Court will offer them protection in any later rent or other relevant dispute relating to the COVID period. If a party seeks to delay agreement of a Voluntary Arrangement, the Court will be mindful of this in determining what order it should make or relief it should grant the other party. The question will be whether the delay was reasonable and justified in the circumstances. For example, if a landlord asks a tenant to provide it with a cash flow statement but the cash flow statement does not make sense or does not match up against the tenant’s bank statement, the landlord would be entitled to seek some additional explanation before offering a voluntary arrangement. However, a landlord cannot use its failure to accept the explanation or the financial evidence provided by a tenant of its financial hardship as reason not to offer it a rent deferral or other option under the Guidance. Similarly, a landlord cannot prolong negotiation over the precise terms of a voluntary arrangement with a tenant, as this document is meant to be a simple record of the basic terms which have been agreed. Delay by either party is likely to be looked on negatively by a Court when later dealing with a dispute which arises from this delay.