Are there any temporary measures applicable to lease agreements or the exploitation of real estate in shopping centres?

Until 31 December 2020, it is suspended:

  • The effects of termination of residential and non-residential lease agreements made by the landlord;
  • The lapsing due to the course of time of residential and non-residential lease agreements, unless the tenant does not object to the end of the lease;
  • The effects of the termination and of the opposition to the renewal of residential and non-residential lease agreements made by the landlord;
  • The six-month period to reinstate the leased property after the end of the lease term, whenever this six-month period term fails while said measures are in force.

During the months of October to December 2020 this suspension is dependent on the regular payment of the rent due that month, except in the case of non-residential tenants who have adhered to the moratorium on rent payment.

While the transitional measures are in force, eviction legal actions or special eviction procedures for the return of leased properties are also suspended when the tenant, by virtue of the final court decision to be issued, may be placed in a situation of fragility due to lack of own housing or any other relevant reason that deserves social protection.

In cases where specific forms of contracts for the exploitation of real estate for commerce and services in shopping centres are applicable, no minimum rental amounts are due until 31st December 2020, being only due to the owners of the shopping centres the variable part of the rent, calculated on sales made by the shopkeeper, being the latter still responsible for the payment of all contractually agreed expenses, namely those related to common expenses and charges (under article 168-A/5, of Law 2/2020, of 31 March, as amended by Law 27-A/2020, of 24 July).

An exceptional regime was also approved for situations of delay in the payment of rents due under residential and non-residential lease agreements (and other similar contractual regimes for commercial purposes). This regime does not prejudice the existence of more favourable regimes to the tenant, resulting from the law or an agreement, entered into or to be executed by the parties, namely debt write-offs or rent payment deferral agreements. In the case of a non-residential lease, if there is a previous  agreement that establishes less favourable conditions for the tenant, the same is void upon communication to be sent by the tenant to the landlord by 20 September, 2020 (the clauses of waiver of rights attributed by law or waiver of recourse to judicial means and acceptance of increases in rent or the period of the contract are void, and the amounts that have already been paid as rent shall not be returned).


What measures of moratorium in the payment of rents have been created?

Provided certain conditions are met, residential tenants may defer the payment of rents due during the months in which the state of emergency is in force and in the month following the end of the state of emergency. Non-residential tenants may defer the payment of such rent as well, and also rent due (i) during the months in which their facilities are closed or their activities suspended following a legal  or administrative measure approved within the context of the COVID-19 pandemic and (ii) in the three month-period following the end of the mandatory closure of its facilities or suspension of activities, provided that such deferral does not apply, in any case, to rent due after 31 December, 2020.

The rents deferred by residential tenants shall be paid within 12 months after the end of the state of emergency, in monthly installments not lower than one-twelfth of the total amount, together with the monthly rent due under the agreement.

The rent deferred by non-residential tenants shall be paid within 24 months as of 1 January 2021 to 31 December 2022. The monthly instalments correspond to the total amount due split by 24, to be paid together with the rent of the month in question or up to the eighth calendar day of each month, in the case of non-monthly rent. Rent already paid is not considered for the purposes of calculating the total amount due.

As an alternative to this solution, the non-residential tenant can make a proposal for a rental payment agreement regarding the payment of rent due and coming due.

If the tenant (residential or non-residential) terminates the lease, the payment of the pending installments becomes immediately due.

 

Who can access to this moratorium?

As regards residential lease agreements, tenants can benefit from the moratorium when there is a drop of more than 20% of the household's income compared to the income of the previous month or the same period of the previous year and the household effort rate, calculated as percentage of the income of all members of that household destined to the payment of the rent, is or becomes greater than 35%.

As regards non-residential lease agreements, tenants can benefit from the moratorium in respect of:

  • Premises leased for retail purposes or for provision of services open to the public that have been closed or which activities have been suspended by virtue of the execution of the state of emergency, notably under Decree no. 2-A/2020, of 20th March, as well as, following the end of the state of emergency, by virtue of legal or administrative order issued in the context of the Covid-19 outbreak demanding for the closure of the leased premises or the suspension of the tenants’ activity, including those that maintain electronic sales, or the provision of services remotely or through an electronic platform; or
  • Premises leased for food & beverage or similar purposes closed pursuant to the legal or administrative orders referred above, including those that maintain their activity limited to take-away or home delivery, under the terms provided for in Decree no. 2- A/2020, of 20th March, or any other similar provision.

The above mentioned rent payment deferral regime does not apply to establishments located in shopping centres that benefit from the regime provided for in article 168-A/5, of Law 2/2020, of 31March, as amended by Law 27-A/2020, of 24 July.

 

What is the procedure to adopt in order to benefit from this moratorium or to present an alternative proposal of rent payment agreement?

Residential tenants have a duty to inform the landlord that they intend to benefit from the moratorium regime, in writing, up to 5 days before the due date of the first rent in relation to which they intend to benefit from this regime, attaching supporting documentation of such situation (under the terms of Ordinance no. 91/2020 of 14th April). If the tenant intends to benefit from the moratorium regime in relation to the rent due on 1st April 2020, the tenant shall notify the landlord of this intention within 20 days after this law comes into force.

Non-residential tenants intending to (i) benefit from this regime or (ii) present a proposal for a rental payment agreement other than this solution, must express their intention to the landlord.

Non-residential tenants must make this communication in writing, and remit the same by registered mail with acknowledgment of receipt to the address foreseen in the lease agreement or in the immediately previous communication from the landlord, up to five days before the first rent in which they intend to benefit from it becomes due, or, in the case of rent payable from July, up until 10 September, 2020.

Within the same period, non-residential tenants may submit a proposal for a payment agreement different from this regime. The acceptance of the agreement or the refusal thereof must be expressed by the landlord, in writing, by registered mail with acknowledgment of receipt to the address of the leased property, within 10 days upon receiving the proposal from the tenant (under penalty of being considered that the landlord expresses his agreement to the proposal). The landlord may, within the same period, present a counteroffer to the tenant, to which the latter must respond within 10 days. Its rejection by the tenant or the lack of  response (within the deadline) determines the application of the moratorium regime provided for by law.

The aforementioned procedure must be expressly included in the communication to be sent by the tenant to the landlord, under penalty of being considered ineffective.

 

Does this moratorium regime have other impacts over lease agreements?

Landlords cannot demand the payment of the compensation legally provided in case of delay in the payment of rents (i.e., 20% on the value of the rent in arrears), in relation to rents under the moratorium regime.

Landlords of non-residential lease agreements under the moratorium regime cannot invoke as grounds for termination or for eviction of the leased premises the default on payment of rents due in the months that benefit from the moratorium regime, nor as grounds for the obligation to vacate the properties.

In the course of the exceptional situation of prevention, containment, mitigation and treatment of the epidemiological infection caused by SARS-CoV-2 and the COVID-19 disease, the landlord cannot execute bank guarantees due to non-payment of non-residential rent.

 

Is there any other financial support for the payment of rent?

Until December 31st 2020, residential tenants, as well as, in the case of students who do not earn income from work, their guarantors, who have a proven drop in income that allows them to benefit from the moratorium (under the terms of Ordinance no. 91/2020 of 14th April), and are unable to pay the rent of the properties for their permanent residency or, in the case of students who reside due to frequency of educational establishments located at a distance greater than 50 km from the permanent residency of the household, can apply to the Institute of Housing and Urban Renovation, P.I. (IHRU, I.P.), for the granting of an interest-free loan to support the difference between the amount of monthly rent due and the amount resulting from the application of a maximum effort rate of 35% to the household income, in order to allow the payment of the rent due, being that the remaining disposable income of the household cannot be lower than the social support index (IAS).

This measure applies to the rents due from 1 April 2020 until 1 September 2020.

This measure is not applicable to residential tenants whose income drop origins the cutback in the amount of rents due, under the terms of special lease or rental regimes, such as supported leasing, supported rent and social rent.

 

Is there any measure to support the landlords?

Landlords of residential lease agreements that have a drop of more than 20% of the household's income compared to the income of the previous month or the same period of the previous year (under the terms of Ordinance no. 91/2020 of 14th April) caused by the non-payment of rents by the tenants under the moratorium regime, and provided that the respective tenants do not use the IHRU, I.P. loan, may request the IHRU, I.P. the granting of an interest-free loan in order to compensate the amount of the monthly rent due and unpaid, whenever the remaining disposable income of the household drops, for such reason, below IAS.

This measure applies to the rents due from 1 April 2020 until 1 September 2020.

Landlords parties in non-residential lease agreements whose tenants fail to make the rent may legally apply for a reduced cost credit line to support the difference between the amount of monthly rent due and the amount resulting from the application to the monthly income, or to the landlord's monthly invoicing, of a maximum debt-to-income ratio of 35%, the demonstration of which is made under the terms of the ordinance to be approved by the member of the government responsible for the area of ​​economy.

 

__________________________

This information is being updated on a regular basis.

All information contained herein and all opinions expressed are of a general nature and are not intended to substitute recourse to expert legal advice for the resolution of real cases.