{"id":2533,"date":"2021-02-15T09:00:55","date_gmt":"2021-02-15T08:00:55","guid":{"rendered":"https:\/\/carlotagonzalez.com\/how-rent-reduction-is-applied-for-tenants-of-business-premises-2\/"},"modified":"2021-05-04T16:39:21","modified_gmt":"2021-05-04T14:39:21","slug":"rent-reduction-tenants-business","status":"publish","type":"post","link":"https:\/\/carlotagonzalez.com\/en\/rent-reduction-tenants-business\/","title":{"rendered":"How rent reduction is applied for tenants of business premises"},"content":{"rendered":"\t\t
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Decree Law 34\/2020, of 20 October, on urgent measures to support economic activity in leased business premises came into force on 22 October 2020. This law was promoted by the Government of Catalonia and includes relief measures for tenants of business premises that have been affected by the business restrictions derived from the COVID-19 pandemic. But do you know what the requirements are to qualify for these measures?<\/p>\n<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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As with the \u00a0Law 11\/2020 of 18 September 18 \u00a0\u00a0on rent control, \u00a0<\/a>\u00a0which was applicable to housing, the measures adopted by the government of Catalonia regarding the regulation of rent of business premises are somewhat controversial. This is mainly because, as is the case with the limitation of housing rental prices, these measures force landlords to contribute to cover the loss of income of tenants who have seen their business affected by the pandemic; nevertheless, it should be the Government\u2019s responsibility to help these tenants deal with their losses by giving them financial support.<\/p>\n

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Beyond the controversy about who is responsible for helping tenants of business premises who are facing economic restrictions and damages to their business due to the pandemic, the main criticism of \u00a0\u00a0Decree Law 34\/2020, of 20 October, on urgent measures to support economic activity in leased business premises <\/a>\u00a0\u00a0is that it fails to lay the foundations for any mediation or negotiation on equal terms between the landlord and the tenant in this type of situation. On the contrary, the regulations prescribe what the final outcome of the negotiation between both parties should be, even if they do not reach an agreement.<\/p>\n

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This Catalan legislation could also conflict with other Spanish regulations that have been enacted for similar purposes, such as \u00a0\u00a0Royal Decree Law 35\/2020, of 22 December, on urgent measures to support the tourism, hotel\u00a0 and commercial sectors, and tax measures <\/a>. This Decree Law also includes modulating rent payments for rented business premises, but it allows for two alternatives to choose from (50% rent reduction or deferrals of lease payments) and only applies during the state of emergency. For this reason \u00a0\u00a0some large landlords <\/a>\u00a0\u00a0in Catalonia have sought to have the Spanish law applied to their case, as they believe it to be more in their interests; however, it is not very clear legally whether this exempts them from compliance with the regulations of the Catalan Autonomous Region on the matter.<\/p>\n

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When does the new law apply?<\/strong><\/p>\n

The measures provided for in Decree Law 34\/2020, of 20 October, on urgent measures to support economic activity in leased business premises, are applicable to lease contracts signed after January 1, 1995<\/strong> for business premises where industrial and commercial activities are carried out. The Preamble more specifically defines the premises covered by the Decree Law as: \u2018property leased for business use, including cultural, educational, sports and recreational activities and services that are particularly affected by this health crisis, such as the beauty industry, hotels and restaurants.\u2019<\/em><\/p>\n

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However, the application of this regulation is not automatic. Tenants may only benefit from the measures contained in this Decree Law if the competent authority has decreed measures to suspend business operations or restrict the material use of <\/strong>those business premises. In other words, it is only possible to benefit from these aid measures whenever, as a consequence of the COVID-19 pandemic, the Government has adopted legal provisions to stop certain business activities or imposed capacity limitations that make it necessary to reduce and limit the space of the business premises (as has happened in Catalonia repeatedly since the outbreak of the pandemic in March 2020).<\/p>\n

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What measures does this law include?<\/strong><\/p>\n

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The main measure foreseen in Article 1 of this Decree Law 34\/2020 entails giving those tenants who have had their business activity stopped or restricted by the pandemic the opportunity to request that landlords apply: \u2018reasonable and equitable changes to lease contract terms, in order to rebalance the obligations between the parties, in accordance with the requirements of good faith and honesty in business arrangements\u2019<\/em>. Changes to contract terms basically translate into reduced rent and other amounts related to it (Property Tax, owners\u2019 association fees, other taxes and fees, supplies …).<\/p>\n

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To qualify for these measures, the tenant (of the business premises that has had its business operations stopped, restricted or suspended due to the pandemic) must send a request to the lessor by express recorded delivery (<\/strong>so-called burofax<\/em>)<\/strong> or other reliable means, to start a negotiation period that is aimed at agreeing on the changes to the lease terms.<\/p>\n

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The parties must reach an agreement within one month<\/strong>. Meanwhile, after receiving the request, the lessor will not be entitled to issue any invoices<\/strong> for rent or other related items until the month provided for negotiation has elapsed.<\/p>\n

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If an agreement is reached within the prescribed 1-month period, the agreement between the parties will apply. If an agreement is not reached during the negotiation period, then the following rules will automatically apply to the rent of the premises and other related items:<\/p>\n

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