Page 2267 - Week 07 - Thursday, 16 June 1994

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FIRST, THE PROVISIONS OF THE CODE DEALING WITH "KEY MONEY" AND

"RATCHET CLAUSES" WILL ALSO APPLY IN RESPECT OF EXISTING

LEASES, BECAUSE OF THE PARTICULARLY UNFAIR AND ONEROUS

NATURE OF SUCH PROVISIONS.

"KEY MONEY" FOR THOSE MEMBERS WHO MAY BE UNFAMILIAR WITH

THE TERM, REFERS TO THE PAYMENT BY A TENANT OF A PREMIUM TO

ENTER INTO, RENEW, EXTEND OR VARY A CONDITION OF A LEASE. THE

MONEY PAID IS NOT RENT, NOR A BOND, NOR MONEY TOWARDS

OUTGOINGS OR ANY OF THE OTHER FORMS OF LEGITIMATE PAYMENT TO

A LANDLORD IN RESPECT OF SERVICES THE LANDLORD MAY HAVE

PROVIDED.

THE TERM "RATCHET CLAUSE" REFERS TO A PROVISION OF A LEASE

WHICH PROVIDES FOR ADJUSTMENTS TO RENT TO BE IN

ACCORDANCE WITH WHICHEVER OF TWO OR MORE METHODS OF

CALCULATING A CHANGE TO THE RENT WILL RESULT IN THE HIGHEST

RENT.

THE BILL WILL APPLY THOSE PROVISIONS OF THE CODE DEALING WITH

KEY MONEY AND RATCHET CLAUSES TO ALL LEASES BUT THE

PROVISIONS WILL ONLY APPLY IN RESPECT OF CONDUCT, FOR

EXAMPLE, AN ATTEMPT TO ENFORCE SUCH A CLAUSE, OCCURRING ON

OR AFTER THE SUBSTANTIVE COMMENCEMENT OF THE CODE.

SECOND, IN CASES OF "HARSH AND OPPRESSIVE" CONDUCT, WHICH IS

PROHIBITED BY THE CODE, THE BILL WILL APPLY TO EXISTING LEASES,

BUT ONLY WHERE THE CONDUCT OCCURS ON OR AFTER THE

SUBSTANTIVE COMMENCEMENT OF THE CODE.

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