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COVID-19 Crisis Poses Risk to Real Estate

On Wednesday, 18 March 2020, the Federal Government declared the COVID-19 (Coronavirus) worldwide pandemic to be a Human Biosecurity Emergency. This declaration, made under the Biosecurity Act 2015 (Clth.), empowered the Federal Health Minister to make various directives designed to protect public health and safety.

The National Cabinet also accepted the Australian Health Protection Principal Committee (AHPPC) advice that non-essential indoor gatherings of greater than 100 people (including staff) will no longer be permitted from Wednesday 18 March 2020.

Also on Wednesday, 18 March 2020, the New South Wales Health Minister, under section 7 of the Public Health Act 2010 (NSW), issued Public Health (COVID-19 Mass Gatherings) Order 2020, which mirrors the Federal directives.

In relation to real estate in New South Wales, these unprecedented circumstances create many concerning and uncertain issues of which to be aware of. For example, these are some of the issues and questions to consider in relation to property assets:

  • Are contracts for the sale and purchase of property now unable to be performed because of “force majeure” or “frustration of contract”?
  • Is abatement of rent available to lessees of commercial premises where regulatory or health and safety limitations on use, access and density of staff are imposed?
  • Will “material adverse change” and “events of default” clauses in finance and mortgage documentation be activated, resulting in the non-availability or calling-in of loan facilities?
  • Are venue hire agreements now cancellable due to “force majeure” or “frustration of contract”.

Be alert to these and other issues resulting from the current unprecedented circumstances and, as necessary, seek and obtain professional advice from our Property & Commercial Law experts in an effort to minimise the commercial impacts. Contact our team by clicking here.

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