COVID-19 rent cuts in UK, Italy and Poland | Hogan Lovells

0

United Kingdom

In the UK, there are various ongoing measures to assist tenants and protect them from landlord enforcement actions for non-payment of rent. These are broadly as follows:

  • A moratorium on the evacuation of commercial tenants by landlords applies until March 25, 2022.
  • The Commercial Rent Debt Recover (CRAR) process (is a legal process that allows landlords of commercial space to collect rent arrears by taking control of the tenant’s goods and selling them) can only be used if the tenant has at least 544 days of primary rent owes.
  • Until March 31, 2022, landlords are prohibited from making legal claims and filing claims for the inability of the tenant to pay commercial rent (unless the landlord has reasonable grounds to believe that either COVID- 19 had no financial impact on the tenant or that the circumstances underlying the liquidation application would have occurred even if COVID-19 had not had any financial impact on the company).

Even so, there is no legal assistance available to tenants to legally force a landlord to reduce or write off COVID-19 residues that have built up while the premises were closed. However, the government is clearly concerned about the multitude of potential bankruptcies (and subsequent job losses) that could result if the above restrictions simply expire. Therefore, she is currently deliberating on ways to deal with COVID-19 areas and one of the proposals being considered is a binding decision in cases where landlords and tenants cannot reach an amicable agreement.

As the consultation continues, the government’s legislative plans on COVID-19 residues remain unclear and commercial landlords and tenants have a number of unanswered questions. For example, what arrears are “earmarked” and subject to arbitration if they are not agreed? What about tenants who may have chosen to stay closed for commercial reasons? Will the legislation expose all the perks already obtained, even if the renter insists they still cannot pay? Are tenants who have already paid in full eligible for a refund? Will the legislation be limited to rent or will it include utilities, for example? The government has stated that purpose limitation will only apply to tenants who have been “affected” or “affected” by COVID-19 “business closings” for the period from March 2020 until restrictions on their sector are lifted. Commercial landlords can take comfort in the fact that this at least suggests that rent will not be accrued when it comes to times when tenants have closed during the pandemic. Tension between landlords and tenants over built-up arrears will therefore continue and the parties will have to wait for more details as the laws will be published before answering at least some of their questions.

Italy

Regarding commercial property leases and commercial premises leases, the emergency legislature in Italy has mainly introduced tax breaks without affecting the relations between the parties, with the exception of that provided for in Article 103 (6) of the Decree “Cura Italia” (Legislative Decree 18/2020, converted into Law 27/2020).

Of the non-tax measures, Article 91 of the “Cura Italia” decree provides that “[…] Compliance with the containment measures referred to in this decree will always be assessed for the purpose of excluding the debtor’s liability under and within the meaning of Articles 1218 and 1223 of the Italian Civil Code, including in relation to the enforcement of forfeiture or penalties related to late or non-performance “. In some judgments it has been found that the aforementioned Article 91 does not provide for the tenant’s right to unilaterally suspend payment of the rent and that the tenant must therefore provide objective data from which he can conclude that his financial situation has changed worsened.

On the other hand, there are some judgments that meet the wishes of tenants who are affected by the socio-economic situation due to the health emergency. According to the Court of La Spezia (15. In general, many courts have applied the provision of Article 91 of the “Cura Italia” Decree to exclude the fact that the non-payment or late payment of the rent constitutes a “serious infringement” (including the Trani Court , September 1, 2020).

At the center of the most recent court rulings, however, is the question of whether the landlord is obliged to renegotiate the contract and whether he can reduce the rent to be paid by the tenant for the months of the “lockdown”.

Several courts confirmed that the solution to the contractual imbalance due to the emergency lies in the principles of good faith enshrined in the Civil Code, which apply to the execution of contracts. In particular, as the Supreme Court has already argued in its opinion no. including Court of Treviso, December 21, 2020).

In particular, the Court of Justice of Rome (August 27, 2020) found that the immediate measures taken by the legislature were insufficient to rebalance the agreement and required the parties to start new negotiations in order to restore the contractual balance.

Other courts shared this approach and recognized the tenant’s right to reduce the rent, at least in relation to the months of closure. Some courts informed the parties of the extent of the reduction to be applied to the rent, while others limited themselves to asking the parties to renegotiate the rent (Milan Court, October 21, 2020) or, more often, postponing the determination of the extent of the reduction to later stages of the proceedings (court in Venice, July 28, 2020). According to these rulings, a renegotiation of the rent in the sense of a temporary reduction would rebalance the contract and demand a significantly lower sacrifice from the landlord than the tenant would have to make if he had to pay the full rent (in this sense, see also the court of Venice , September 30, 2020).

However, there have also been rulings to the contrary, which have deprived the judge of changing the economic terms of the leases by reducing the rent, albeit temporarily (Rome Court, February 19, 2021 and Biella Court, March 17, 2021).

The above judgments make it clear that legislative intervention would be appropriate, if not necessary, in order to establish clear criteria and parameters for the settlement of disputes between landlords and tenants in Italy. In fact, this scenario has been interpreted and applied differently by the courts to this day.

Poland

In Poland, specific rent limit regulations have only been introduced for renting business premises in shopping centers with an area of ​​more than 2,000 m². March 2020 came into force, the mutual obligations of a landlord and a tenant from a lease for the period in which the activity of the tenant in question is prohibited due to the Covid-19 restrictions, up to the date on which such a ban exists, to be suspended is canceled.

According to the recent amendment to the Covid Act, all claims, including rents and incidental expenses, that a tenant has to pay under a rental agreement (or any other arrangement that consists of granting the right to use commercial property, including rental agreements) are theirs The object is commercial space in a shopping center with an area of ​​more than 2,000 m²) are to be reduced to 20% of their value or within three months from 50% of their value for the period in which the activity of the tenant concerned was prohibited on which the ban was lifted.

For other rental agreements, including hotel rental agreements, no specific rental limit regulations have been introduced in Poland. Tenants often demand rent reductions with reference to the so-called rebus sic stantibus clause of the civil code. According to this provision, a party can apply to the court to change the terms of the contract if the performance of the contract is significantly hindered by unexpected and unforeseeable circumstances. There are already precedents for court rulings ordering rent reductions due to the Covid-19 pandemic on the basis of this clause. However, the courts are obliged to take into account the economic situation of both parties when reaching a judgment, so that the outcome depends on the circumstances of the individual case.


Source link

Share.

Leave A Reply