Covid-19 – Anti-Crisis Shield – Leases
In its current form, the so-called Anti-crisis Shield features a number of regulations concerning lease agreements. An overview of the proposed changes follows.
Rent Reduction and Limited Liability
Tenants who meet certain criteria can expect a 90% discount on rent (unless a particular lease agreement offers a more favourable solution) and will not be held responsible for any non-performance or improper performance of the agreement caused by bans or restrictions introduced by the government. The above applies to tenants who:
- conduct business in shopping centres with sales areas larger than 2,000 m2,
- are required to suspend or limit their operations due to a threat of epidemic or an official state of epidemic, and
- suspend their operations, as required.
It is important to note that all three conditions must be met in order to receive protection. Additionally, if the amounts due are still unreasonably high, courts may adjust them to reflect the generally accepted principles of community life.
Stores Allowed to Restock on (Most) Sundays
As long as the threat of epidemic or an official state of epidemic persists, as well as for a period of 30 days after the restrictions are lifted, stores will be able to restock on Sundays unless there is a public holiday that happens to fall on a given Sunday. This means that once the Act enters into force, stores will be allowed to accept, unload, and display basic products on most Sundays, instructing their regular staff to perform these tasks or hiring someone else to do it.
Commercial and Office Premises
No Lease or Rent Rate Termination
Until 30 June 2020, landlords will not be able to terminate lease agreements or rent rates unless the tenant breaches contractual provisions or violates legal regulations on the manner of using premises or unless the building in which the premises are located needs to be demolished or renovated.
Lease Extension by Tenants
Tenants will be able to extend lease agreements made before the act enters into force and set to expire after its enactment but before 30 June 2020 without changing lease conditions. As long as the tenant informs the landlord about the intended extension no later than on the planned expiry date, the lease term will be extended until 30 June 2020.
No such extension is possible if any of the following is the case:
- the tenant has been in delay with payment of:
- rent, or
- other amounts due on account of using the premises, or
- amounts that the landlord collects on behalf of another person or company
for (at least) a single settlement period during the last six months before the Act enters into force or – if the agreement was concluded less than six months before the Acts enters into force – during the term of the agreement, and the total amount of debt exceeds monthly rent;
- the tenant has breached the lease agreement by using the premises in a manner contrary to their agreed or intended use or has damaged the premises by neglecting to perform contractual obligations;
- the tenant has leased or subleased the premises (or a part of the premises), or allowed a third party to use them free of charge, without obtaining the landlord’s prior written consent as required.
For further guidance, please contact: