The Potential Impact Of COVID-19 On Leases In The Bahamas – Real Estate and Construction – Bahamas – Mondaq News Alerts

Former United States Supreme Court Justice ThurgoodMarshall once said, "History teaches that gravethreats to liberty often come in times of urgency, whenconstitutional rights seem too extravagant toendure."1

Recently, the Government of The Bahamas announced an ambitiousrental assistance programme to assist tenants who have beeneconomically affected by COVID-19 and are unable to satisfy theircontractual obligation to pay rent. According to the Prime Ministerof The Bahamas, tenants who qualify for the programme would havethe following benefits during the months of April, May and June20202:

In order to qualify for the programme, tenantsmust3:

It should be noted that such programme has no impact oncommercial leases or residential rentals over $2,000.00 per month.Thus, landlords in such circumstances could distrain for rent orproceed to have tenants evicted4.

As governments around the world grapple with the impact ofCOVID-19 and its legal implications, some legal pundits havequestioned the legality/constitutionality of rental assistanceprogrammes which abrogate contractual rights. The impact of statesof emergency on lease agreements is well documented. In the UnitedKingdom, during World Wars I and II, legislation was enacted whichessentially modified obligations arising under lease agreements. In1916, the (Emergency Powers) (Amendment) Act, 1916 was enacted,which allowed tenants to apply to the court for leave to have theirtenancies terminated. The court had an absolute discretion toterminate a lease notwithstanding any provisions within the leasedealing with termination. Further, termination of the lease couldtake place on such notice or terms that the court deemedfit5. See Revill v. Bethel [1918] 1 K.B. 638.

Similarly, according to the Courts (Emergency Powers) Act, 1939,also enacted in The United Kingdom, landlords were barred fromtaking possession of property or recovering rent during a state ofemergency without leave of the court6. In the EnglishCourt of Appeal decision of Re Affairs of Kirby [1944] K.B. 2139,Scott LJ said the following in interpreting theAct7:

"..both legal proceedings and measures of self-helpavailable to landlords for recovery of rent or of possession ofland for non-payment of rent are forbidden without leave of thecourt, and the effect of that Act was to create in the tenant aquasi-right to possession and to immunity from rent or mesneprofits which continued so long as the court did not give thelandlord leave to proceed by either road courts orself-help."

See also the Court of Appeal decision in Humberston EstatesLimited v Allen et al [1941] 2 K.B. 317.

In 1941, the United Kingdom enacted the Liabilities (War-TimeAdjustment) Act, 1941 which had the effect of suspending theexecution of a landlord's judgment for possession. The purposeof the Act was intended to be a middle course for debtors who wereindebted to creditors as a result of World War II, without imposingthe harsh stigma of having such persons adjudgedbankrupt8.

In many constitutional democracies, such as The Bahamas, thestate has powers to authorise measures which are reasonablyjustified during the subsistence of a state ofemergency9. Given the broad scope of Article 29(2) ofthe Bahamian Constitution, these measures could include theimplementation of a rental assistance programme.

The rental assistance programme foreshadowed by the Governmentof The Bahamas is clearly important to the public health and safetyof the community and reasonably justified during the COVID-19pandemic. If landlords can evict tenants with no or limited income,jurisdictions like The Bahamas would likely see a sharp increase inhomelessness. As a result, governments would have to open sheltersto accommodate such persons, where social distancing would beimpractical.

If an outbreak were to occur at a shelter the public healthimpact could be cataclysmic, leading to a surge in COVID-19 casesand creating broader challenges. In fact, governments like TheBahamas may be forced to take the draconian step of compulsorilyacquiring properties to house homeless persons 10.

Notwithstanding the emergency powers available to states,jurisdictions like The Bahamas must ensure that they do not actcapriciously. It is incumbent on The Bahamas and otherjurisdictions to enact legislation giving effect to rentalassistance. Any abrogation of rights under a lease should be donethrough the enactment of robust legislation and not a policy.

In the absence of legislation, any attempt by the Government toimplement and enforce such programme would be illegal. Presently,no legislation has been enacted in The Bahamas giving effect to therental assistance programme.

In the wake of COVID-19, jurisdictions globally will have tore-evaluate laws relating to landlords and tenants. Nations shouldconsider enacting legislation similar to those previously mentionedin this article in order to protect the interests of both landlordsand tenants. Lastly, landlords should consider including termswithin lease agreements specifically relating to states ofemergency.

During a state of emergency, governments can implement rentalassistance measures which allows for statutory modification ofrights under a lease. However, such actions must not be undertakenin a cavalier manner and well considered legislation ought to beenacted in support of the same.

Footnotes

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

Continue reading here:

The Potential Impact Of COVID-19 On Leases In The Bahamas - Real Estate and Construction - Bahamas - Mondaq News Alerts