Corona law: suspension of payments due to loss of rent

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Content of the legal regulation

On Wednesday, March 25, 2020, the Bundestag unanimously adopted a bill to mitigate the consequences of the Covid 19 pandemic in civil, bankruptcy and criminal procedure law (BT printed matter 19 / 18110). Article 5 § 2 (pages 13 below and 14 above) contains a so-called rent moratorium. The rule is:

§ 2 Limitation of termination of tenancy and leases.

    1. The landlord cannot terminate a lease for land or space solely on the grounds that the tenant does not pay the rent in the period from April 1, 2020 to June 30, 2020 despite the due date, provided that the non-performance affects the effects of COVID-19 Pandemic based. The link between the COVID-19 pandemic and non-performance is credible. Other termination rights remain unaffected.
    2. Deviations from paragraph 1 cannot be made to the disadvantage of the tenant.
    3. Paragraphs 1 and 2 apply accordingly to leases.
    4. Paragraphs 1 to 3 are only applicable until June 30, 2022.

According to § 4 paragraph 1 number 2 this can by ordinance without the consent of the Federal Council to be extended to rents until 30.09.2020/19/2, "if it can be expected that the social life, the economic activity of a large number of companies or the employment of a large number of people will continue to be significantly affected by the COVID-XNUMX pandemic." Paragraph XNUMX empowers the federal government, by ordinance with the consent of the Bundestag and without the consent of the Bundesrat to extend the deadlines referred to in paragraph 1 beyond September 30, 2020 without a time limit if the impairments continue afterwards.

immediate effects in practice

AC has announced today (27.03.2020) that it will not pay rent in the next few months and will then negotiate contractual improvements (here). Adidas has also announced that the rental payments will cease (here). Here it is reported that too Deichmann and H&M no more paying rents. Several other companies claim reduction and / or corona timeout, which we as lawyers naturally know relatively quickly because our owner clients immediately seek legal advice and help.

The fact that the big players in the industry immediately stop paying their rent should remove any obstacles in many smaller businesses from bridging the current sales-free phase with other means. We expect traders to stop making payments across the board.

As a landlord, can you now stop making payments yourself?

With the rents, the turnover at the landlords is reduced due to the corona, which leads to the question of which payments they can now stop. This regulates Article 5 § 1 of the Corona Law:

§ 1 moratorium

(1) A consumer has the right to benefits for the fulfillment of a claim that is connected with a Consumer contract stands, the one Permanent debt ratio and was closed prior to March 8, 2020, until June 30, 2020 if the consumer due to circumstances attributable to the spread of infection with the SARS-CoV-2 virus (COVID-19 pandemic) the service would not be possible without endangering his reasonable livelihood or the fair livelihood of his dependents. The right to refuse performance exists in relation to all material long-term obligations. Significant long-term obligations are those that are necessary to cover with services of adequate general interest.

(2) A Micro businesses within the meaning of Commission Recommendation 2003/361 / EC of 6 May 2003 on the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36) has the right to benefits to fulfill a claim refused until June 8, 2020 in connection with a contract that is a long-term debt relationship that was signed prior to March 30, 2020, if due to circumstances related to the COVID-19 pandemic,

1. the company cannot provide the service or
2. the company would not be able to provide the service without endangering the economic basis of its business.

The right to refuse performance applies to all essential long-term debt. Significant long-term obligations are those that are necessary to cover with services for the appropriate continuation of his business.

(3) Paragraph 1 does not apply if the exercise of the right to refuse performance is unreasonable for the creditor, since the failure to provide the service would endanger the economic basis of his business. Paragraph 2 does not apply if the exercise of the right to refuse performance is unreasonable for the creditor, since the failure to provide the service would endanger his reasonable livelihood or the reasonable livelihood of his dependents or the economic basis of his business. If the right to refuse performance is excluded according to sentence 1 or 2, the debtor has the right to terminate the contract.

(4) Paragraphs 1 and 2 also do not apply in connection
1. with rental and lease contracts according to § 2, with loan contracts and
2. with labor law claims.

(5) Paragraphs 1 and 2 cannot be deviated from to the disadvantage of the debtor.

The law differentiates between consumers and small businesses on the one hand and all others on the other. Consumers and micro-businesses can stop payments in the event of significant long-term debt. The prerequisite is that corona-related payment difficulties arise, which is easy to prove here by referring to the loss of rent.

Apart from renting, companies cannot stop payments, but entrepreneurs as private individuals (= consumers) can.

How long can I stop paying?

Now comes the exciting question: who pays first?

The moratorium on termination in § 2 applies until 30.06.2022, the payment moratorium for all others in § 1, on the other hand, only until 30.06.2020. C&A therefore has 2 years longer than the landlord to pay the arrears. This means that the landlord has no chance of making payments on time. The recipient of the landlord payment, for example a small house cleaning company, then has no chance of fulfilling its own obligations on time. Those who are dependent on the commercial rent payments are allowed to litigate against each other, while the commercial tenants can wait and see themselves. It is true that their obligation to pay is not suspended as such. In the absence of pressure to terminate the contract, you can process this in peace or simply see whether the landlord can still collect enough money to be able to afford such a process.

In our view, one thing is certain: on July 1.7.2020st, XNUMX there will be many service providers and people who have not yet been served. As a result, the need for an extension of the legislation can already be structurally foreseen.

In detail

the delimitation is not easy. What is "essential"? What about the following costs, for example?

property-related costs
- Utilities (water, electricity, gas, BSR)?
- insurance? Is the insurance then free of charge in the event of a claim?
- the property management?
- Long-term contracts such as pest control, house cleaning, garden maintenance, elevator emergency calls or elevator maintenance?
- current taxes and duties such as property tax and street cleaning?
- Loan interest?
- loan repayment?
- leasing rates for the office copier? The computer?
- telephone costs?

private costs
- private or voluntary statutory health insurance?
- Contributions to the pension fund or another professional pension scheme?
- ongoing nursing home costs for parents?
- school fees for the children? Childcare contributions?
- gym? Piano lessons for the kids? Car leasing rates?

What about one-time expenses, such as a craftsman's bill?

A detailed elaboration of the colleague Wilfried Stechow with it you'll get in this post. Anyone who wants to read all about the topic, including bankruptcy and loan law, will find it here a first overview.