COVID-19 store closures: a tenant’s guide

For tenants who have had to close their premises as a result of the coronavirus pandemic, this blog covers a number of key points to consider (my other blog on the impact of “keep open” obligations in the context of the Covid-19 can be found here).

Communication

Talk to your landlord and let them know you have closed. Leases usually contain an obligation to notify the landlords of any material issue affecting the premises, which would include a store closure. Bear in mind that landlords have their own obligations (for example to notify their insurers if a property is empty), so it is important to keep these lines of communication open. Any notices should – where possible – be served in accordance with the notices provisions of the lease. While e-mail is ordinarily not a recognised means of service, in the current situation we would recommend that a copy of any communication is also sent to by e-mail to speed up the communication process.

One point of caution (which also applies to landlords) – in the midst of frantic and quick communication, take care not to contractually bind yourself to something unfavourable which you can be held to at a later date. For more on this please see Nick Naddell’s blog here.

Securing the premises

Insurers’ requirements for empty properties vary from insurer to insurer. Your landlords will be able to confirm any specific requirements for your premises, but generally these will be along the lines of the following:

• All reasonable security precautions for the safety of the premises should be taken including the security of all doors, windows and other means of entry which would not ordinarily cause concern. Consider removing stock from display and the use of security shuttering.
• Remove any combustible materials (loose cardboard, alcohol etc).
• All sources of power, fuel or water should be isolated at the mains and isolation valves chained and padlocked (this may require the draining of all water systems other than sprinkler systems).
• Regular inspections should be carried out where possible – insurers tend to require an inspection at least every 30 days, however this should be exercised in accordance with government guidance.

Insurance

Notify your own insurers, particularly if you have business interruption insurance.  While many business interruption policies will not cover a pandemic scenario it is always worth checking if your policy contains an extension for “notifiable disease” (which includes Covid-19). Reach out to your insurance broker or get in touch with us to discuss.

For more analysis see the blogs by Graeme Bradshaw and Donald Findlay.

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