Temporary Rent Reduction Agreement Small Business

overkillxx on 07/08/2020 - 10:07
Last edited 07/08/2020 - 12:06 by 1 other user

Hey Guys,

My partner has a small business in Melbourne that has suffered considerably. Forced to shutdown during stage 3 (Both times) & obviously still shutdown in stage 4. During this period the landlord reduced the rent she pays by 50 percent.. The agent now is becoming quite pushy for her to sign the following form.

Besides the obvious (A concrete end date to the period of reduced rent) is there anything else she should be concerned about when signing this?

The idea of a fixed end date seems unrealistic. Its not clear how long this nightmare will last.. It could be another 3 months before her business is allowed to reopen, and in the meantime she is haemorrhaging money.

Education & Work

Comments

  • Fredfloresjr on 07/08/2020 - 10:16

    Don't sign anything. Scomo will always comes to the rescue. You are correct, we all don't know when will this Pandemic ends.

  • capslock on 07/08/2020 - 10:30
    +1

    You can always ask for an extension or sign a new agreement if the arrangement needs to be extended in the future.

    What happens though if you decide later that you need an even bigger reduction (like zero rent) during the agreed time period? You may not be able to while this agreement is in place.

  • [Deactivated] on 07/08/2020 - 10:32

    You could request that it be amended to read whilst level 3, 4 or higher restrictions are in place only 50% rent will be payable or something to that effect.

    • overkillxx on 07/08/2020 - 10:48

      That makes sense.. Thanks.. I will request for that..

  • wannagrababargain on 07/08/2020 - 10:52

    How was the current 50% reduction agreement negotiated and agreed upon? Were all parties clear what the pre and post rent was/is? Were all parties clear on what the start and end date of the 50% reduction was/is?

    Seems like a pretty standard form agreement and protects both the Landlord and Tenant. A start and end date is absolutely realistic and is in line with the VCAT advice. Both Landlord and Tenant need to negotiate a) The amount of reduction and b) The period of reduction based on coming to a mutual understanding of their respective situations. An "open ended" agreement puts too much risk on one party. Probably want to make sure the start of the period is 'backdated' to the beginning of the rent reduction period.

  • whooah1979 on 07/08/2020 - 11:37

    Op. It's sad to hear that you guys have fallen victim of this terrible situation. The longer this goes on the more stories we will hear of businesses closing their doors.

  • ozhunter on 07/08/2020 - 11:45

    During this period the landlord reduced the rent she pays by 50 percent

    And now you're complaining about having a fixed date for the reduced rent?

    • overkillxx on 07/08/2020 - 12:06

      First off,

      Im an landlord myself for 2 properties.. So I have full perspective of both sides.

      In regards to the 50 percent reduction. . My partner has ZERO dollars coming in for the business. Further to that the hard reality is if she decided to close the doors permamently the Landlord would definitely not find another tenant for a very long time (Conservatively speaking a year plus without doubt).

      So yeah no. I don't think its a sound idea to give a hard end date to when a reduction in rent is to finish since we don't have a hard end date on stage 3 or 4. hence this topic.

      • ozhunter on 07/08/2020 - 23:03

        if she decided to close the doors permamently the Landlord would definitely not find another tenant for a very long time (Conservatively speaking a year plus without doubt).

        That's the LL problem, isn't it?

        It could be another 3 months before her business is allowed to reopen

        It could be less.

        As it's already been said, you could ask for an extension or sign a new agreement if the lockdown continues for more than 3 months.

  • netjock on 07/08/2020 - 14:03

    It is pretty normal to put a set end date. It can be extended. You just need to give them the paperwork as proof you've got no income. Better to have someone paying half rent and able to cover some of the expenses (water rates, insurance, council fees) than nothing at all.

    Not aimed at you but unfortunately I've heard of a lot of stories about manipulating the situations on all sides. It seems like even in such a dire situation people still want to take the last dollar and cent off the table.

  • Typical16-bitEnjoyer on 07/08/2020 - 15:15
    -1

    Get legal advice.

    Your partner can, and should be, requesting a 100% rent reduction during Stage 3 & 4 providing there is no other way to trade (ie. click & collect, online)

  • TheBilly on 07/08/2020 - 16:52

    What industry does your partner operate in? even if the lock down finishes, will your partner even recover from this based on historical earnings and projected earnings? what is to say we don't have another pandemic in 2023 and your partner is shut down again as she is pandemic sensitive. Just asking because it might not be worthwhile kicking a can down the road and just call it quits and shut shop.The agreement she will sign is effectively what the banks are doing but without the interest - it will all have to be paid back at some point it is just being delayed.

    Watch this video.

    https://www.youtube.com/watch?v=dRA1ubG8k6E

  • crashloaded on 08/08/2020 - 09:39

    Check the retail leases act for your state. In QLD forcing a tenant to agree to compensation before a disruption has occurred is prohibited/void.

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