Corporate & Commercial

As a tenant I am a party of a lease agreement based on which I am conducting my only business activity in the leased business premises. Due to the COVID-19 epidemic I am unable to conduct my business, therefore, I am not generating any revenue. The landlord did not agree to exempt me from paying the rent, nor did he agree to lower the rent. Am I still obligated to pay the rent, although I am not using the business premises?

In principle the answer to your question is yes, unless the lease agreement explicitly regulates such a situation differently.

If the lease agreement regulates a situation in which due to force majeure, state measures, epidemics, etc. the tenant is unable to use the space, the terms of the lease agreement are primarily applicable. Otherwise, the applicable legislation governing lease relationships, as well as case law, must be considered. The Business Buildings and Business Premises Act (ZPSPP) and the Obligations Code (OZ) do not explicitly stipulate the legal consequences for cases where the lessee cannot carry out business activities in the leased premises without his fault (as well as without the fault of the lessor). Thus, in our opinion, the legislation does not provide a direct basis for non-payment of rent. Generally, none of the statutory provisions that would justify a lessee’s claim for a reduction in rent would be applicable in our opinion as well. OZ namely foresees a reduction in rent only for the following cases, i.e. if the object of the lease is partially destroyed or damaged, if the lessee’s right to lease the property is restricted due to a right of a third party, if the object of the lease is defective at delivery or if a defect occurs during the lease term, etc.

Notwithstanding the above, it is of course necessary to take into account all circumstances of each individual case, as situations may vary significantly and legal assessment of the case could, due to materially different facts of the case, also be different. There is also the possibility that the legislature will soon regulate the legal implications for such cases, similarly to some other EU Member States.

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