Any changes for Private Tenants?
The corona virus and the measures taken by the federal government will not change anything for private tenants. They can use their flat as before and of course have to pay the rent.
Do entrepreneurs still have to pay the rent despite the ban on entering the premises?
As is well known, it is currently prohibited to enter the customer area of business premises of retail and service companies as well as leisure and sports facilities for the purpose of purchasing goods or services or using leisure and sports facilities (with the exception of the companies already mentioned above). Restaurants may not be entered at all.
For this reason, the question arises whether the rent must continue to be paid or whether entrepreneurs can invoke § 1104 f ABGB. According to § 1104 ABGB, no rent or lease is payable if the existing property is not used or cannot be used at all due to extraordinary coincidences. By "extraordinary coincidences" the jurisdiction understands elementary events which cannot be controlled by humans and which massively affect a larger number of people.
In the event of partial incapacity to use the existing property, the rent is to be reduced in accordance with § 1105 ABGB.
Although this law has been in force for more than 100 years, there is no relevant case law for the current situation.
To answer this question the following steps should be considered:
- § S1104 f ABGB, which could be applicable here, is not mandatory law and may be modified or excluded by contract. Therefore, the first step is to check whether or which agreements the contracting parties have made in the rental agreement. If the tenant has undertaken, in the rental agreement, to also bear the risk for extraordinary circumstances not within his sphere of risk and to pay the rent in this case as well, the landlord will be able to refer to this regularly. For this reason alone, a general statement is not possible and would not make sense, because it depends on the circumstances of the individual case. In fact, the rental agreement must be analysed in order to make a meaningful statement. Therefore, statements of several lawyers in the media, which make quite brash statements, should be treated with a lot of caution.
- Regulation BGBl./II No. 96/2020 governs a ban on entering the customer area to purchase goods, use services or use leisure and sports facilities and was valid for a limited period of one week. This ban on entering the customer area was extended until 13 April 2020.
- According to the clear wording of the law in this respect, the prerequisite of § 1104 ABGB is that the existing object cannot be used or utilized at all. The current temporary ban on entering the property leads to a considerable restriction of the usability of the existing property, but most likely not to the fact that the property cannot be used at all. The ban on entering the premises is directed against the entrepreneur. The violation of this provision by the entrepreneur is punishable by a fine of up to EUR 30,000.00. A completely, non-emotional analysis of the provision could accordingly lead to the conclusion that the existing property is not completely unusable and therefore § 1104 ABGB is not applicable.
- For restaurants, there is a comprehensive ban on entering. However, delivery services are permitted, so that the kitchen facilities can be used for deliveries.
- All other industries affected by the prohibition on entering the customer area could of course object that premises are rented for the sole purpose of operating a business, in order to enable customers to use the premises to demand the goods or services offered. No entrepreneur would rent the same premises just to enable him to use the office only for himself, while the customer area, which is much larger, may not be used as intended and customers may not even enter the premises.
- A proportionate rent reduction to the extent of partial impracticality can therefore be considered. However, the extent of a rent reduction claim must always be examined on a case-by-case basis and depends on the agreements in the lease, the specific circumstances and the state measures and restrictions at federal and state level.
- There is currently no ban on entering offices regardless of size. There is a recommendation to work from home offices where possible and can be agreed between employer and employee. However, the fact that someone works at home rather than in an office does not release the tenant of the respective office from the obligation to pay the agreed rent. But here too, an assessment must be made on a case-by-case basis, based on the specific circumstances and the state measures and restrictions taken in each case.
- We currently advise that tenants should contact their landlords so that a reasonable solution can be found. Please remember that there will be a time after the crisis and tenants and landlords should have a reasonable basis for discussion.
Compensation from the state?
The Epidemics Act provides for compensation claims by injured parties in §§ 29 ff.
However, the ordinances on the prohibition of entry were not issued on the basis of the Epidemics Act, but a separate legal basis was created with the COVID 19 Measures Act.
The COVID-19 Measures Act does not provide for compensation obligations. In the amendment to the COVID-19 Measures Act adopted on 20 March 2020, a new Section § 4 (2) was inserted. Accordingly, the Epidemic Act is not applicable to ordinances issued by the Federal Minister on the basis of this COVID-19 Act. Due to the non-applicability of the Epidemic Act, there is also no obligation to pay compensation. Therefore, there is no compensation.
Various measures are provided for to reduce the economic disadvantages caused, such as the COVID-19 crisis management fund, hardship funds for tourism businesses and for EPU/SMEs, tax deferrals and bridging guarantees. Some of the specific measures are already available (e.g. tax deferrals), and some are currently being set up. In any case, you should compile precise documentation on the periods and the amount of your loss of income in order to have it available for assertion.
Premature termination of the rental agreement?
The current situation is temporary. The current regulation is valid until Easter Monday, April 13, 2020. Accordingly, there are currently no extraordinary reasons that would justify an early termination of the lease. Should the measures continue for a longer period, the situation would have to be reassessed.
We are happy to advise landlords or tenants so that you can find the optimal solution for your company. Please contact us at email@example.com or by phone at 01 725 77.