Moratorium on local business leases due to COVID-19

Following the declaration by the World Health Organization of the international pandemic caused by COVID-19 on March 11, the rapid spread, both nationally and internationally, has motivated the need to react quickly and to adopt urgent and decisive measures in order to cushion the impact of this unprecedented crisis. Royal Decree 463/2020, of March 14, declared a state of alarm for the management of the health crisis situation caused by COVID-19, which includes, among other issues, restrictions on freedom of movement, with the effects that this entails for workers, companies and citizens. In this article I will try to explain the scope of the moratorium on rent payment approved in RD-Law 15/2020, of April 21, on complementary urgent measures to support the economy and employment, with the purpose of verifying the impact that it may have on all businesses through business premises leases. In this sense, the moratorium will be examined from different perspectives: 1.- Affected rents; 2.- Requirements that tenants must meet; 3.- Temporary scope ;- 4.- Consequences of improper application of the temporary and extraordinary deferral in the payment of rent.One of the measures adopted to reduce the costs of SMEs and the self-employed contained in RDL 15/2020, of April 21, consists of the possibility of requesting a moratorium on the payment of rent for leases for use other than housing, that is, leases of business premises. What is established in the regulations is mandatory, as long as all the requirements set out therein are met, and is articulated as a basic, since it does not detract from the parties, landlord and tenant, may reach a different agreement that allows moratoriums that are broader than those provided for in this law, or even rent cancellations or reductions in agreed rent amounts; in fact, the approval of the law will not allow the review of those agreements that have been reached prior to its entry into force. This rule has its effects on leases for use other than housing, essentially leases of business premises, provided that the landlord is a company or public entity of housing, or a “big fork”. A large holder is a natural or legal person who is the tenant of more than 10 urban properties, excluding garages, storage rooms, or a constructed area of more than 1,500 m2. In the case of a large holder, the moratorium will be mandatory, and automatically applied, without the landlord being able to object. On the other hand, when the landlord is not a large holder, and despite the fact that the law in its article 2 makes mention of leases owned by a landlord who is not a “large holder”, the truth is that, according to the wording of the regulation, it is not articulated as an obligation that must be accepted by him. If the tenant makes use of the possibility established in this article to request a temporary and extraordinary deferment in the payment of the debt, and the landlord does not accept it, he cannot demand it in other ways, since the automatic application of this moratorium is not contemplated, so it depends on the agreement of the parties. Another measure that is articulated is the possibility of using the security provided as a guarantee of tenancy obligations, which, as we know, is two months for leases for use other than housing for rent payment. However, this measure will depend on that agreement reached between the parties; in practice, in the absence of an agreement, if the tenant requests that the security provided be attributed to income and he does not accept it, he may be able to file an eviction action for non-payment, which can only be undone if the tenant proceeds to pay it. As for the requirements that the tenant must meet, and can benefit from the mandatory moratorium provided for in article 1 of RDL 15/2020, he must be a self-employed person or an SME. general character the following companies fall into this category:

• Microenterprises: They have less than 10 people and their annual turnover or annual balance sheet does not exceed two million euros.
• Small businesses: They have less than 50 people and their annual turnover or annual balance sheet does not exceed 10 million euros.
• Medium-sized companies: They have less than 250 people and their annual turnover does not exceed 50 million euros or their annual balance sheet does not exceed 43 million.

In the case of self-employed hoteliers, they must be affiliated and registered on the date of declaration of the state of alarm, that is, March 14, 2020. In addition, it is required that the activity has been suspended due to the state of alarm or due to any of the subsequent resolutions, which is applicable to the hotel establishment, whose opening to the public is suspended according to the order of the Ministry of Health SND/257/2020.Thus, the request for a moratorium must be made within one month of the entry into force of RDL 15/ 2020, so it can be done until May 23, 2020. It will last a maximum of four months. As it is a moratorium, that is, a deferral of payment, and not a rent forgiveness, it must be paid within a maximum period of two years that will be counted after the end of the state of alarm, or of the four months deferred, through installment payments. In any case, if the lease lasts less than two years, the rent must be satisfied before the end of the tenancy. If the parties have agreed to use the deposit as a rent payment, the tenant must repay it within one year after the agreement was reached, or within the period remaining after the term of the contract, if it were shorter. In any case, the tenant must prove to the landlord that he meets the requirements required by law; however, if the latter benefits from the moratorium without complying with the requirements, you will be responsible for any damages that you may have caused as well as for the expenses generated that you may have generated.

José Luis Valencia (T&L Attorney)