End of moratorium on business arrears during COVID-19 pandemic – Real estate and construction
United States: End of moratorium on trade arrears during COVID-19 pandemic
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The 9e In November, Her Majesty’s Government issued a press release regarding proposed new laws and a code to resolve remaining COVID-19 commercial rent debts.
In the cycle, the proposals are expected to provide a legally binding process by which landlords and tenants must resolve commercial rent debts arising from the pandemic. In addition, a new code of practice is being launched in the form of guidelines for landlords and tenants on negotiating a way forward. In addition, the government will put in place measures to protect tenants from landlord remedies against rental debts – including through the use of legal proceedings for debts. The aim is to bring the market back to a state of normalcy.
The moratorium on commercial rent arrears has been extended until March 25, 2022, in an effort to give tenants a break and a period during which landlords and tenants could negotiate a solution to the arrears. The new code of good practice will underpin these negotiations and provide a roadmap for the settlement of unpaid debts.
As for the long-term position, on November 9, the Commercial Rents (Coronavirus) Bill is introduced in Parliament to establish a new law from March 25, 2022 – an arbitration process for landlords and tenants after having exhausted the process outlined in the new Code of Practice. Subject to the passage of the bill by Parliament, which is likely, we will have a new law starting next year dealing with the arrears of commercial rents accumulated during the pandemic.
The government press release shows that currently, the bill will apply to arrears in commercial rents resulting from the closure of specific businesses (such as those in the hotel sector) during the pandemic. The outcome of the arbitration process will oblige the parties to reach a legally binding arrears agreement.
The press release goes on to point out that from November 10, the government must protect commercial tenants from county court and High Court judgments for rent arrears accumulated during the COVID-19 pandemic and also for them. bankruptcy applications.
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