Legal Updates

A long term lessee will not be evicted from a leased property even though he failed to pay rent during the Covid19 lockdown

May 18, 2021

A lessee of a warehouse unilaterally canceled checks handed over for rent due to a lockdown that occurred during the Covid-19 epidemic and the lessor sought to evict the lessor from the leased property.

The Court dismissed the claim and held that the lessee should not be evicted even though it breached the lease agreement. A contract must be carried out in good faith and the longer the contract "lives" and the more the parties have a normal contractual relationship the less emphasis one would put on breaches, certainly in times of uncertainty such as the Covid-19 pandemic. Here, it is a lessee who has leased a warehouse and showroom located in a high demand area for about three years with no previous breaches. The lessee canceled a check without justification which in fact is a breach of the lease agreement as the lessee's ability to use the warehouse for its purpose was not impaired and it even benefited from the leased properties during the lockdown period. However, as the cancellation of the check was made during a period of uncertainty and as this is a first and isolated breach, this breach should not be regarded as a material breach that justifies the eviction of the lessee.