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Coronavirus | Rental agreements, contracts will continue to prevail, say legal experts

Real estate rental agreements and contracts are between two parties and the government cannot enforce any notification, experts say

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Representative Image

Real estate rental agreements and contracts will continue to prevail during the novel coronavirus, or COVID-19, pandemic and the force majeure provision will continue to be applicable as mentioned in the contract, said Justice Arjan Kumar Sikri, former judge, Supreme Court of India and International Judge, Singapore International Commercial Court (SICC).

Addressing a webinar on ‘Assessing the impact of COVID-19 on Rental Contracts’ organised by FICCI in association with Indian Council of Arbitration (ICA), Sikri said real estate rental agreements and contracts are between two parties and the government cannot enforce any notification.

To provide relief to both landlords and tenants, the government may consider introducing a temporary law as is being done by some of the countries today like the US and Singapore, said advocate RK Sanghi.

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Sanjay Dutt, Joint Chairman, FICCI Real Estate Committee and Managing Director and CEO, Tata Realty and Infrastructure, pointed out that global office markets like Tokyo and Hong Kong have waived off rent, which stands at $600 per sq ft per annum for office space. In India, the top office markets stand at $15 per sq feet per annum.

The key is the agreement and the notifications of the government on deferment or non-payment of rent by tenants are primarily moral obligations and not legal obligations. In the COVID-19 situation, the contract between the landlord and tenant will prevail, said Sudip Mullick, Partner, Khaitan & Co.

Mutual negotiations the best solution. The best solution in a situation like COVID-19 is that the landlord and tenant find a way out with mutual negotiations. In case the force majeure provision has to be triggered, the party will have to give a notice, said PV Kapur, senior advocate and Bar at Law.

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First Published on May 21, 2020 08:42 pm
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