Leases of premises in shopping centers – temporary suspension of agreements

On 31 March 2020 the Senate adopted a draft amendment to special act regarding COVID-19 which is part of the so called AntiCrisis Shield in which a scheme of temporary suspension of tenancy, lease or other similar agreements was proposed for the time over which restrictions on trade will apply (see details below). The Act is now to be adopted by the Sejm (the lower house of the Polish Parliament) and then signed by the President of the Republic of Poland. The Act is expected to come into force as of 1 April 2020.

THE SCHEME OF TEMPORARY SUSPENSION OF AGREEMENTS

TO WHOM IT APPLIES: 

  • premises in shopping centers with sales area over 2000 m2
  • parties to tenancy, lease or other similar agreements:
    – if the user of the commercial premises is subject to the prohibition on conducting business activities
    – when the user of the commercial premises is not subject to the prohibition on conducting business activities – the regulations are not clear in this respect; the justification beyond the Anti-Crisis Shield draft states that the system is also to support these parties which are not subject to the prohibition but whose turnover has dropped as a result of the prohibition

OPERATION DURING THE PROHIBITION:

  • temporary suspension (freezing) of the obligations resulting from the agreements is applicable from the date when the prohibition was introduced, that is 14.03.2020, until the date the prohibition is lifted; the agreements continue to exist but are temporarily inactive (suspended)
  • agreements are temporarily suspended (frozen) – parties to the agreements, that is those who make the premises available and those who use them, are temporarily exempt from the obligations resulting from the agreement, for example, the tenant/lessee shall not be obligated to pay the lease rent and service charges throughout the duration of the prohibition while the landlord/lessor is exempt from the performance of its contractual obligations towards the tenant/lessee over that period

OPERATION AFTER THE PROHIBITION:

  • agreements are automatically “revived” when the prohibition is lifted and are continued unchanged following the contractual terms applicable until the end of the rental/lease period defined
    in the agreement,
  • the tenant/lessee is obliged to make to the landlord/lessor a binding offer to renew the agreement:
    – in the offer the original period of the agreement is to be extended (the original rental/lease period provided for in the agreement  + duration of the prohibition + 6 months)
    – the offer shall be made by the tenant/lessee within 3 months of the date the prohibition is lifted
    – the offer shall cover renewal of the agreement on current terms (applicable before the prohibition was introduced)
    – the landlord/lessor is not obliged to accept the offer – it shall individually determine if it is advantageous to accept or to reject the offer; if the landlord/lessor does not accept the offer, the agreement shall be in force until the end of the original rental/lease period set forth in the agreement
    – the suspension (freezing) of the agreement for the period of the prohibition is not dependent on the landlord’s/lessor’s reaction to the offer (its acceptance or rejection)
  • If the tenant/lessee does not place the offer on time – the suspension of the agreement will cease to be binding for the landlord/lessor with retroactive effect; consequence: the tenant/lessee
    will be obliged to pay the lease rent and the maintenance fees for the time when the prohibition was in place.

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