Analysis of the Impact of Covid on Lease Agreement

We are witnessing a magnificent event that has not only upended all of our fiscal and social standards to date, but has also had a deep impact on our relationships – both interpersonal and social. The issue of non-installment of the lease by tenants and the landowner is evident in virtually all huge urban neighborhoods where there is a broad concentration of itinerant labor. Humanity is under duress as it tries to avoid the dangers of the global epidemic. The new millennium has ushered in a period of severe crises in all areas of life.

Our economy has been a huge hit with thousands of people out of job and unable to afford basic costs for living such as rent.

Due to payment arrears by their landlords, renters will be expelled. In view of the terrible evictions during the lockdown, the state has lately published a circular in support of renters’ rights, which allows for the flexibility of rent payments. The landlord and the tenant have a legal relationship controlled by the rental agreement. The agreement is based mostly on agreed terms and conditions established by the parties in advance of future events. Nonetheless, a contagion was not on anyone’s mind when they signed a lease deal.

The notion of frustration under Section 56 of the Indian Contract Act and Section 108(e) of the Transfer of Property Act must be compared in this case. This will help us understand the tenant’s responsibility in circumstances where the power of attorney clause is lacking from the lease agreement. Whether any major part of the land is entirely destroyed by fire, storm, or flooding, or by the violence of an army, a mob, or other irresistible force, the lease shall be unlawful, at the lessee’s discretion, under Transfer of Property Act.

According to this interpretation, Section 56 of the Contract Act does not apply to leases, and instead, Section 108 (e) applies to lease frustration. In any case, even the provisions of Section 108 (e) of the Transfer of Property Act are questionable in the existing circumstances, because the site was neither razed nor proved to be permanently unsuited for the purposes of the occupation. Amid layman’s terms, it’s out of line to expect the occupier to fulfill his obligation in “abnormal circumstances,” such as the COVID-19 outbreak, where he might be under extreme financial strain right now.

The legal system frequently favors logic. The doctrine of ‘Power Majeure,’ as defined by the law, states that a gathering’s responsibility is temporarily stopped or permanently postponed when an unforeseen event arises that make the fulfillment of an agreement intelligible.

As it were, a collection for whom the responsibility it is to discharge an obligation – in this case, pay his monthly to monthly lease – is protected irrespective about whether they fail to do so when the event is recognized by law to be unexpected and beyond their influence. Regardless, the “waiver of rentals” would be based on the facts and circumstances of each case.

Inconsequential non-use or refusal to use the property cannot be considered an event that renders it “generously or for all time unsuitable.” These judgments could enable a tenant or owner deal with a variety of situations depending on whether a contract included a sufficient ‘Power Majeure’ clause.

Nonetheless, the question remains as to what the remedies will be if the agreement does not provide a force majeure clause. This pandemic situation was unexpected and unforeseeable, which has forced us into this position. The mere presence of a ‘Power Majeure’ proviso in an agreement would not entitle a resident to a waiver.

That is, unless and until a scenario of failure to use or get to the properties for causes as widespread as the COVID epidemic is authoritatively defined between stakeholders. If the tenancy agreement is silent and does not address a “lockdown” circumstance, a lease suspension mostly during lockdown frequency cannot be expected solely owing to the lockdown or non-use of the property.

The provisions of the region of the Contract Act will be reflected if an agreement has a “Force Majeure” clause, under which the installment might be postponed.

If the agreement’s terms do not include “Power Majeure circumstances,” whether any of the Force Majeure circumstances are outside the agreement’s statements, section 56 of the Indian Contract Act, 1872, might be used. Furthermore, if the tenant seeks security under the agreements, he may do so solely because the property has been fully destroyed, making the properties permanently and abundantly unsuited for use. Along these lines, nothing benefits a tenant or occupant unless and until the contract protects their interest.

Despite the fact that the spreading pandemic may have put residents in a difficult situation, and despite governments advising landlords to take a compassionate approach, the ‘lockdown’ caused by the novel Coronavirus cannot be used by the tenant to excuse himself from paying rent in normal circumstances, unless there is something to the contrary in the accommodation agreement. It is entirely dependent on his or her legally obligated game plan. A perfect environment would have been for the tenant to arrange and discuss the waiver, deferrals, and other issues with the owner, avoiding complications and penalties.

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