According to the latest concepts of the draft bill of the special act, supporting companies and employees in the situation of the coronavirus pandemic, tenants in shopping centres will be able to count on even a 90% rent reduction.
The planned regulations introduce revolutionary changes to the freedom of lease relations. The protection of tenants in shopping centres, who cannot operate due to the introduction of a state of epidemic hazard, and then a state of epidemic, is to include not only the reduction of lease rents by 90% of their value. Tenants are also to be released from liability for non-performance or improper performance of the agreement if it was the result of a prohibition or restriction of the tenant’s activity under the provisions of law and the tenant did not conduct such activity during the period covered by the prohibition or restriction.
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This solution is already very controversial. On the one hand, it has been accepted with visible relief by the trade industry, which has been put in a situation of a statutory ban on business from one day to the next. On the other hand, the owners of shopping centres are clearly opposed to such solutions, which practically transfer the effects of the current crisis to them.
However, it should be noted that the act uses the term “rent”, and in commercial leases, in addition to rent, tenants pay additional fees, such as service, administrative or marketing fees. According to the content of the lease agreements these are different kinds of tenants` obligations.
Thus, literally speaking, the planned reduction is to apply only to the rent, while other charges will remain unchanged.
From the tenants’ point of view, these different types of charges are de facto additional rent, as they are not directly related to the premises, such as the costs of utilities. Such a view seems to be defensible in the context of Polish regulations. What will happen in practice will turn out in the near future.
Director of the Commercial Law and Property Department, Advocate
TGC Corporate Lawyers
TGC Corporate Lawyers
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