Contracts

Rules for exemption from rent and other charges of shopping center tenants under the anti-crisis shield

Adopted in connection with the COVID-19 epidemic, the so-called anti-crisis shield (the Act on special solutions related to the prevention, counteraction and eradication of COVID-19, other infectious diseases and crisis situations caused by them of March 2, 2020 with subsequent amendments of March 31, 2020) provides for legal measures to support tenants commercial premises and other types of space in large-scale commercial facilities.

Rent-free period as a result of the temporary expiry of the lease

The most far reaching and also the most controversial means of tenants’ support is provided for in art. 15ze paragraph 1 above, upon which all mutual obligations of the parties to a lease, tenancy or other similar contract temporarily expire. The expiration of mutual obligations means that the tenant is exempt from the obligation to pay any fees due to the landlord (rent, service fees, marketing fees), as well as from other obligations arising from the lease (e.g. the obligation to maintain the premises in a good condition and to carry out renovations and repairs). On the other hand, the expiration of obligations on the part of the landlord may mean that during the period of expiry of the lease it will not be obliged to provide the premises to the tenant or to provide him with the necessary utilities in the form of electricity or heating. In extreme cases, this may expose the tenant to damage due to damage or damage to the tenant’s goods or equipment located in the premises being the subject of the lease, to which the tenant may be deprived of access.

Tenants covered by the exemption

The mechanism of temporary expiry of the obligations under the lease described above applies only to tenants of space in commercial facilities with a sales area above 2,000 m2, whose activity was prohibited under the provisions of law during the period of epidemic emergency or epidemic status.

Currently, the ban on operations in facilities with a sales area above 2,000 m2 is regulated by the provisions of the Regulation of the Council of Ministers on establishing specific restrictions, orders and bans in connection with the epidemic of March 31 (Journal of Laws of 2020, item 566). According to them, the ban covers:

  1. retail trade by owners and tenants of commercial space, excluding owners and tenants whose predominant activity consists of selling:
    a) food within the meaning of art. 3 clause 1 of the Act of 25 August 2006 on food and nutrition safety (Journal of Laws of 2019, item 1252 and of 2020, items 284 and 285),
    b) cosmetic products within the meaning of art. 2 point 9 of the Act of 4 October 2018 on cosmetic products (Journal of Laws item 2227) other than intended for perfuming or beautifying,
    c) toilet articles,
    d) cleaning products,
    e) medicinal products within the meaning of art. 2 point 32 of the Act of 6 September 2001 – Pharmaceutical Law (Journal of Laws of 2019, item 499, as amended4)), including in pharmacies or pharmacy outlets, f)medical devices within the meaning of art. 2 clause 1 point 38 of the Act of 20 May 2010 on medical devices (Journal of Laws of 2020, item 186),
    g) foodstuffs for particular nutritional uses within the meaning of Article 3 clause 3 point 43 of the Act of 25 August 2006 on food and nutrition safety,
    h) newspaper, i) construction or renovation articles,
    j) articles for pets or
    k) fuels;
  2. conducting service activities by owners or tenants of a service area, with the exception of owners or tenants whose main activity is the provision of medical, banking, postal, insurance, laundry or catering services consisting only in the preparation and delivery of food;
  3. conducting retail trade or service activities on commercial islands.

The provisions of the anti-crisis shield regarding the suspension of tenant’s obligations do not apply to tenants of commercial and service spaces in facilities other than large-scale commercial facilities, e.g. premises in office buildings, tenements or free-standing commercial buildings with an area of ​​up to 2,000 m2.

Extension of the lease as a condition of rent-free period?

At the same time, under the provision of art. 15ze paragraph 2 of the aforementioned Act, tenants are obliged to submit to the landlord an unconditional and binding offer of will to extend the lease term under the existing terms and conditions for the duration of the ban extended by six months. The tenant should submit an offer to extend the lease within three months from the day the ban was lifted.

It is not entirely clear what legal consequences will result from the tenant’s failure to comply with the obligation to submit an offer to the landlord. The provision of art. 15ze paragraph 2 in fine indicates that the provisions providing for temporary suspension of obligations under the lease agreement cease to be binding on the landlord as of the expiry of the deadline for submitting the offer. Despite the faulty wording of this provision, it seems that the intention of the legislator is to closely link the obligation to submit a lease extension offer with the possibility of taking advantage of exemption from rent and other obligations of the tenant. In other words, it depends on the tenant’s decision whether it wants to take advantage of the temporary exemption from the obligations arising from the contract for downtime.

To be able to take advantage of such a privilege, he must submit an offer to extend the lease within three months from the date of lifting the operating ban. Otherwise, the landlord will not be bound by the provision of art. 15ze paragraph 1 and will be able to demand from the tenant the performance of obligations for the period of downtime. It seems that the above interpretation is consistent with the ratio legis of the provisions in question. On the one hand, the legislator exempts tenants from due payments to the landlords, but on the other, it allows the landlords to obtain at least partial and deferred financial compensation in the form of an extended rental period.

Application of the provisions of the Civil Code

The provisions of the anti-crisis shield described above do not prejudice the relevant provisions of the Civil Code regulating the obligation relationships of the parties in circumstances in which legal restrictions on the freedom of economic activity are introduced. In practice, this means that each party to the lease agreement may also take advantage of legal remedies provided for in the Civil Code, such as a request before a court to amend or terminate the agreement pursuant to art. 3571 of the Civil Code.

Do you want to know more about changes in the law related to the status of the COVID-19 epidemic? Contact us.

Author team leader DKP Legal Marcin Kręglewski
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