20 April 2020

Resolving property disputes during Covid-19

The number of property disputes tends to increase during times of economic uncertainty, and there’s no doubt that if you’re currently involved in a dispute, whether about commercial, residential or agricultural property, Covid-19 will have an impact. Recently we’ve seen several changes in how transactions and disputes can proceed, and how rights surrounding property can be enforced. With the courts and tribunals working differently at the moment, there are also some practical issues around investigating claims. We discuss the key points below.

Commercial property

The commercial property market has been hard hit by Covid-19. After initial relief provided by the government’s relaxation to business rates liabilities, a suspension of the rent quarter day and a curtailment to forfeiture powers for non-payment of rent, many landlords are now feeling the pressure of dwindling cash flow. Many commercial tenants are finding that landlords are looking to use their other remedies such as stand-alone debt recovery powers, insolvency actions, forfeiture as a consequence of other breaches of the lease or Commercial Rent Arrears Recovery.

These are all lawful remedies. Whilst there are fewer courts open for business such actions are likely to take longer to reach a final hearing and so we don’t yet know if the courts will sympathise with landlords or tenants – certainly it is likely that there will be public policy arguments aired both ways.

Commercial landlords and tenants in all sectors should also be mindful of their ability to provide vacant possession on time if they have exercised a break option and ‘how’ they are occupying premises for business purposes in the context of the protection of the Landlord and Tenant Act 1954 and renewing leases. With an inevitable surplus of office, restaurant and retail space once lockdown is over, we are expecting creative arguments from landlords and tenants to clarify that leases have validly terminated / tenants have lost security of tenure or that liabilities to the landlords are still enforceable.

Residential property

The Government advises that “vital” house moves could still proceed as could moves into empty properties. With advice to delay residential transactions if possible, parties are being encouraged to cooperate to extend deadlines rather than looking to pursue remedies for breach of contract if, for example, completion does not take place when originally planned. Lenders are being encouraged to be flexible too.

For those who are renting privately, the Coronavirus Act provides that landlords who want to end tenancies by service of a Notice to Quit which could end a tenancy after two months had expired (or less in some cases) must now wait for three months before that Notice takes effect.    The courts have said that they will not grant any new Possession Orders or allow Warrants for evictions to be granted for a period of three months from 27th March 2020.

Court proceedings

Many court buildings are closed to the public but remain staffed, but some have been closed altogether with their business being dealt with elsewhere. Where proceedings are not urgent, they are usually being delayed by means of a stay of proceedings. Where hearings need to take place, they are not taking place in person but either by telephone or video link.

It’s not always possible to deal with trials by remote means, if for example witnesses need to give evidence and to be cross-examined or if in the case of a dispute about property, the trial judge needs to visit the site in dispute. Accordingly many trials are being adjourned.

Parties are being encouraged to agree extensions to the timetable for each stage of litigation.  We are generally seeing three month extensions being agreed, but there is no automatic entitlement to such extensions and parties need to ensure that they are progressing matters wherever they can and are ready to deal with deadlines well in advance.

Land Registry disputes concerning ownership and rights over land

Where disputes concern the registration of property, adverse possession, the claiming of rights over land or the position of boundaries, these can be commenced by making an application to the Land Registry. If that application is not resolved by negotiation, it will proceed to the First-Tier Tribunal (Property Chamber).

New rules were introduced at the end of March as to how the Tribunal is working, including:

  • No further face to face hearings or mediations are taking place until further notice
  • Hearings or mediations could take place remotely by using Skype or telephone
  • No inspections of premises or property will be carried out by the Tribunal for at least six months
  • All cases listed for final face to face hearings up until at least the end of May are being postponed but could be relisted for a remote hearing or, alternatively, determined on the documents if the parties agree, and
  • Urgent matters could be dealt with on paper or by a remote hearing, but the parties will have to satisfy the Tribunal that there is an urgent need for matters to be dealt with.

Disputes about agricultural land

Many disputes that involve agricultural land are dealt with in the First-Tier Tribunal (Property Chamber) and so the points above are should be considered.

There is no restriction in the emergency legislation on the service of Notices to Quit farm workers cottages occupied by agricultural workers, nor is there any restriction on the service of Notice to Quit an Agricultural Holdings Act Tenancy or Farm Business Tenancy. There has been no change to the deadlines or procedures generally imposed by the legislation that governs those tenancies. Some of those deadlines simply cannot be extended by agreement.  This means, of course, that landlords and tenants need more than ever to be proactively dealing with deadlines, to understand what they need to do to comply and to understand which can be amended by agreement and which cannot.

In common with all types of property, disputes about agricultural land frequently require valuations or meetings on site. Unless the matter really is urgent and therefore the visit is essential, they ought to be delayed to stay in line with Government advice.

Alternative Dispute Resolution (ADR)

Mediation is a valuable way of resolving property disputes. Usually, the parties negotiate from separate rooms, with a mediator passing information and offers between them. There is no obvious reason why that process couldn’t take place through a video conferencing facility. That said, if it is desirable or necessary for the mediator to look at the site under discussion, again the process may have to be delayed.

The current situation certainly means that processes are operating differently, but there is no reason why a property dispute can’t be investigated and resolved effectively. There is likely to be a sudden rush, when restrictions are lifted, to put matters back before whatever court or Tribunal has jurisdiction and to move forward matters where physical inspections need to take place. In the meantime, and as ever, parties to all disputes do need to consider whether they can reach agreement or at least narrow the issues so that normality resumes, and matters can be dealt with in the most effective way.

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About the Author
Esther Stirling, Partner, Head of Agriculture and Rural Affairs

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