How businesses can reduce rent (after quarantine)

Back in March 2020, regional authorities began to close the most epidemiologically dangerous organizations - fitness clubs, cinemas, cafes. 

Most of the entrepreneurs who have lost income because of this rent their premises. 

Of course, no one wants to pay for something that cannot be used. Especially if you lose your source of income.

In her article Daria dots the most pressing issues:

Is it possible not to pay rent at all for the time during which it was impossible to work due to restrictions?

There are two categories of tenants who have this opportunity:

1. Those who can agree on this with the owner of the premises.
   
   Important: such an agreement must be formalized as an additional agreement to the lease agreement, and if the lease agreement is registered with Rosreestr, you will also have to register an “additional”
2. Some tenants of state property.
   
   For example, Decree of the Government of the Russian Federation No. 670-r exempts from payments for April-June those tenants who simultaneously meet three criteria:
   • They rent the property of the federal treasury (the lease agreement was concluded with the Federal Property Management Agency);
   • They are small or medium-sized businesses or non-profit organizations providing public benefit services;
   • They are among the “most affected” industries.

Who has the right to demand a rent reduction? What reduction can be expected under the law?

All tenants (not just those from affected industries) who have been unable to use the premises due to restrictions may request a reduction in rent. This possibility was secured by law No. 98-FZ, however, it does not say anything about the size of the reduction. & nbsp;

The Supreme Court clarified the situation somewhat. In “coronavirus” Review No. 2 it is said that in the event of a dispute, the court will determine how much the rent should be reduced based on "the amount by which the rent would normally be reduced in the current situation."

To whom and under what conditions is a deferral of rent payments due?

Tenants belonging to the “most affected” industries are entitled to deferment of rental payments. 

Article 19 of Law No. 98-FZ establishes that a deferral of 100% of the monthly payment is due to tenants until the date when the high alert regime is canceled. After the abolition of the regime and until October 1, 2020, the tenant must pay 50% of the regular payment every month. 

Important: A deferment is not an exemption from payments, the debt will accumulate and after October 1, 2020 it will have to be paid off. The parties to the contract can agree on the date by which the debt must be repaid, but within certain limits:

• the landlord cannot demand the full repayment of the debt before January 1, 2021;
• the tenant cannot request a delay longer than until January 1, 2023;
• the monthly payment towards the debt must be no more than half of the monthly payment for the current lease.

If the business has suffered too much - is it possible to simply terminate the lease and move out? Can you avoid penalties?

Law No. 98-FZ gives the right to early terminate the contract and move out (regardless of the terms of the contract) to tenants who simultaneously meet two criteria:

• they are among the “most affected” industries;
• they are small or medium enterprises

Important: such tenants do not pay any penalties for early termination of the contract, but lose the security deposit.

Do the authorities give additional benefits to those who rent state or municipal property?

There are indeed special rules for tenants of public property. The specific composition of benefits depends on what kind of property we are talking about - federal, regional or municipal. 

Benefits for tenants of federal property are established by the already mentioned Decree of the Government of the Russian Federation No. 670-r. In addition to exempting some tenants from making payments, the Order also provides for a deferral of rent payments.

In addition, by virtue of Law No. 98-FZ, tenants of public land plots can count on the extension of the lease without bidding.

Finally, additional benefits can be established at the regional and local level. 

More about all this in the article Daria Tretyakova “How to reduce rent for a business” for T—F at the link: https://journal.tinkoff.ru/lover-yur-rent/

Author

Daria Vladimirovna Tretyakova

Head of representative office in Moscow