IN these days of lockdown, many tenants have contacted our law firm explaining that they cannot pay rents for their commercial premises, store, restaurant, office, etc.
There are also a number of landlords who have requested information about the possibility of claiming the rents that are not being paid for their premises or rights to terminate the contract.
In relation to the RENTAL OF BUSINESS PREMISES or USE DIFFERENT FROM THAT OF HOUSING, it is prudent to review the measures approved in Royal Decree-Law (RDL) 15/2020, in relation to the coronavirus crisis.
LARGE OWNERS. This RDL states that in cases where lessors are large holders (that is, they have more than 10 urban properties, or constructed areas of more than 1,500m2), or are public housing entities, a moratorium (delay) in the payment of the rent for the period related to the state of alarm, its extensions and even the following monthly payments up to four months, will be put in place AUTOMATICALLY, and the tenants may pay by a deferred method, without penalty or interest, within a period of TWO YEARS. The lessor or tenant must meet the requirements stated in the law including the fact that the activity must have been suspended, reduction of 75 per cent of invoicing, etc.
SMALL OWNERS. The problem is that in most cases the owners of commercial premises are small landowners, and the RDL does not anticipate anything, beyond the possibility of requesting a deferment or modification of the rent, but it is not mandatory.
Therefore, RDL 15/2020 does not foresee any solution for the majority of businesses seriously affected by the coronavirus, who cannot pay their monthly rents, since the moratorium will depend upon a voluntary agreement between the parties.
Our advice is for the parties to negotiate, and we understand that RDL 15/2020 is compatible with other possible options possible in law, such as the well-known rebus sic stantibus doctrine or the possibility of modifying the conditions of the contract due to the change in circumstances caused by of the COVID-19 crisis.
In the application of this doctrine however there are many elements that must be considered with regards to such rental of business premises if such an application is to be accepted, for example, for the application of RDL 15/2020 (75 per cent decrease in invoicing, duration of the moratorium on payment, etc.).
In addition, when the tenant claims the application of the rebus sic stantibus doctrine to their commercial premises lease, we understand that it must be accompanied by an appropriate
justification of the change in circumstances in order to warrant a reduction or moratorium on the monthly rent.
If you are a landlord or tenant of a business premises and you want to know your rights and possibilities regarding the payment of rental income and wish to decide a legal strategy regarding a negotiation or possible court claim, contact our law firm.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
White & Baos
Tel: +34 966 426 185
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