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Covid-19

Coronavirus and Commercial Property in Gibraltar

This article explores some key issues relating to the impact of the outbreak of coronavirus (COVID-19) on the commercial property sector in Gibraltar.

The provisions of commercial lease agreements that have already been entered into will generally govern the obligations and responsibilities of landlords and tenants. However, common law doctrines and prudent business practices require parties to act reasonably in the face of the unprecedented issues presented by COVID-19.

  • Compliance with lease obligations - Many leases will require rent payments to be made in advance on a quarterly or monthly basis and, unfortunately, they do not permit tenants to withhold rent. It is important to review the provisions of existing leases in light of adverse impacts on businesses as a result of COVID-19 which may lead to a breach of the lease provisions. Such a breach could entitle the commercial landlord to exercise its right to seek damages or forfeit the lease (albeit relief from forfeiture may be available from the Court).
  • Rent reduction - For landlords and tenants alike, any agreement relating to a rent reduction or any flexibility in payment of rent should be carefully documented to avoid any unintended consequences in respect of the rest of the provisions in the lease agreement i.e. the inadvertent release of a guarantor.

To read the complete article please download the PDF attached.