By Mulengera Reporter
In his Monday night Coronavirus address, President Yoweri Museveni once again warned landlords against pressurizing tenants to pay rent because they have not been working due to the Covid19 lockdown that has seen various workplaces closed.
“They [landlords] don’t have to cancel the debt or loans [that is for banks]. However, they can reschedule them. That is all we are asking for. Government will not allow such behaviour, because remember you are making money out of us… you should share in our problem; you can’t say ‘now I want my pound of flesh’ like Shylock in the Merchant of Venice,” said Museveni in his 13th Covid19 address delivered at State House Nakasero in Kampala.
But beyond Museveni’s orders to landlords, what does the law say about handling rent matters during situations like the one we are currently in? According to lawyer Daniel Angualia of Angualia Busiku and Company Advocates, answering this question requires understanding two things: tenancy agreements and the concept of force majeure.
“Force majeure is a clause inserted in the contract that is intended to excuse a party from performing his or her contractual obligations due to an event that the parties could not have anticipated or beyond their control,” explains Angualia.
“The effect is that both parties are excused or discharged from the performance of their contractual obligations during the occurrence of the act. If a contract cannot be fulfilled due to force majeure, the obligations may be exempted in whole or in part depending on the impact of the force majeure.”
A Managing Partner at Angualia Busiku and Company Advocates, the seasoned contracts lawyer notes that force majeure comprises four ingredients (or simply what constitutes/qualifies this concept): an exceptional event or circumstances beyond the affected party’s control has occurred; the affected party could not reasonably have provided against the event or circumstance before entering into the contract; the same party also could not reasonably have avoided or overcome the event or circumstance once it arose; and the event or circumstance is not substantially the result of an act or omission by the counterparty.
He further argues that because Covid19 was outside the control of both the tenant and the landlord; neither party could reasonably have provided against it before entering into the tenancy agreement; and neither party could reasonably have avoided or overcome the spread of the Coronavirus, the current situation qualifies as force majeure.
However, even when declaration of Covid19 as a pandemic make the disease ‘an act of God,’ and the subsequent presidential directives place the crisis beyond both the landlord’s and tenant’s control, Angualia warns that whether the latter can refuse or suspend payment of rent due to Coronavirus is dependent on the terms of the tenancy agreement.
“In order to claim force majeure, force majeure must be specifically provided for in the tenancy agreement whereby the parties are excused from performance of their contract. It is necessary to look to the tenancy agreement for provisions where rent may be suspended, delayed, deferred or reduced, or tenant’s obligation may be suspended, delayed or deferred, if the rented premise cannot be used or accessed due to epidemic/pandemic, disease outbreak, government order or other similar causes,” the lawyer notes.
“It is important to emphasize that force majeure clause is not implied by law and neither is it automatic. In this case, it must be expressly included in the tenancy agreement by the parties, and the wording of the clause has to be examined to determine if it is wide enough to include Presidential directives and Public Health (Control of Covid19) (No. 2) Rules 2020 or the Covid19 outbreak and which denies the tenant’s right to use or access the premise, thereby leading to suspension or exemption of the tenant’s obligation to pay rent.”
The experienced lawyer also argues that in the current situation, landlords may not be held liable for tenants’ failure to use the rented premises since the lockdown was a presidential directive.
“The shutting down of premises or closing of businesses is directed by force of law under Presidential directives… and not due to any act or omission by the landlord. The landlord was not directed to lock up the entire building and prohibit access to the premises therein,” he says. “Therefore, it cannot be said that the tenant’s inability to use the premise is due to the landlord.”
From his experience as a lawyer, Angualia notes that the other reprieve for tenants, especially those in retail businesses and industries, might be to look at other clauses in the agreements that allow suspension of rent payment.
“Common provisions in tenancy agreements where rent is suspended because tenant is unable to use or occupy are usually confined to damage or destruction of the premises caused by events not attributable to the tenant,” he says.
While many might not even be aware of the terms in their tenancy agreements, others have not signed any. What Angualia Busiku and Company Advocates advise is mutual understanding, between landlord and tenant, of the current circumstances to resolve issues of rent.
“We hope that landlords and tenants shall work together to weather this unprecedented economic storm, and not out rightly insist on strict compliance with rent payment on tenants who are genuinely affected.”
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