Revisiting tenancy contracts in the age of Covid-19 lockdowns

One relationship that is likely to be affected during this lockdown period is that of landlords and tenants of commercial spaces in Kigali.

Tenants of commercial buildings that are required to stay closed may wonder whether they are still contractually obliged to pay rent to their landlords for the period that they have not been able to access the premises.

As with many legal questions, the answer is not very straightforward. For guidance, it is imperative to consider the positions of the law governing contracts and the tenancy contract.

The Law governing contracts in Rwanda recognizes that there are certain circumstances beyond a party’s control that make it impossible for the party to perform its obligations (a force majeure event). According to the law, the consequence of a force majeure event is that neither party to the contract is liable for failure to perform its obligations where the failure is caused by the force majeure event.

A tenant may thus argue that the lockdown restrictions which are not the fault of either party make it impossible for the landlord to grant access to the premises to the tenant and that therefore both landlord’s obligation to provide the premises to the tenant and the tenant’s obligation to pay rent for the period are extinguished.

However, it is not clear whether this is the correct interpretation as the law does not specifically provide a detailed list of what kind of events may constitute force majeure. The assumption is that parties will define for themselves what constitutes force majeure in their contracts. Or perhaps the parties will agree upon its occurrence that what has occurred is a force majeure event. In practice, it is not easy to agree on this after the fact.

With regards to contracts, and more particularly tenancy contracts, landlords and tenants could stipulate that lockdown restrictions would constitute a force majeure event which would cause the suspension of the performance of their mutual obligations for the period of the lockdown. However, many rental contracts do not currently have force majeure clauses and therefore you will still not find any answers from examining them.

In view of the limitations of the law and most tenancy contracts, it might be best to consider some practical solutions. Possible solutions may include negotiating a temporary adjustment of the rent payment terms: a reduction in rent, or a waiver of rent payment for the lockdown period, or a postponement of rent payment. 

In exchange, the tenant could agree to extend the tenancy contract for a longer period.  It is best to approach such negotiations with a view to achieving a win-win solution for both the landlord and the tenant.

By Richard Balenzi Published : January 24, 2021