Rent payments in pandemic times I

Regardless of what parties may have agreed on in a lease contract, the bill prohibits lessors from unilaterally terminating leases solely on the grounds of the lessees’ default in payment of rent. This only applies under two conditions: (i) the default concerns rent due between 12 March and 30 June 2020 (the ‘decisive period’); and (ii) the lessee has proven to the lessor, within 15 days from the first default in payment in the decisive period, that the default was mainly due to the restrictions caused by the extraordinary measures that rendered it impossible or substantially more difficult to carry out their business activity.

The prohibition shall apply from the act’s effective date until 31 December 2020 (the ‘protection period’). If lessees fail to o pay the outstanding rent by 31 December 2020, to which they are obligated by the act, lessors may then terminate leases with a five-day notice. Moreover, the lessors’ right to terminate leases on other grounds shall not be affected by the above provisions.

If a lease terminates before the protection period expires, the lessee is obliged to settle all outstanding rental payments that have become due within the decisive period, within 30 days after lease termination.

Please note that:

• The above does not apply to defaults in payments for utilities/services connected with the use of the premises, meaning that should the lessee fail to make payments for these utilities/services due in the decisive period, the lessor may terminate the lease on these grounds in accordance with the lease contract.
• In our opinion, lessees will still be obliged to pay to lessors default interest and other sanctions for late payment, in accordance with the lease contracts.
• If a lessee is in default as regards payment of rent for a period after 12 March 2020, and the lessor had terminated the lease on these grounds in accordance with the lease contract before the act entered into effect, the legal force of such lease termination shall not be affected by the act.

The act also provides certain protection to lessors: once the impediments on the part of the lessee have been removed, however, no earlier than after the state of emergency has ended, they may demand the termination of the lease if they cannot be reasonably required to endure the limitations to the extent stipulated.

The bill is yet to be debated by the senate, and the senators may have some reservations about the version submitted to them. Hence, the final wording may differ from the above. It is thus advisable to watch this area closely. Please also note that a similar bill is now being debated as regards leases of premises for residential purposes.