New Measures to Support Tenants During Coronavirus Crisis

On June 8, 2020, a law establishing new measures to support tenants in connection with the negative consequences of the coronavirus pandemic, was published. The law amends the previously published Federal Law N 98-FZ, which regulates relations between tenants and lessors during the epidemic. The changes entered into force on June 8, 2020.

Unilateral withdrawal from an agreement

In addition to the right to demand a rent reduction due to the inability to use the leased property for its intended purpose further to the introduction of the high alert or emergency regime in the relevant region, provided to all companies without restricting specific industries, a new basis for reducing rent for a particular category of business entities was introduced by the Federal Law No. 98-FZ dated April 1, 2020.

The right to withdraw from a lease agreement was given to tenants – small and medium-sized businesses, carrying out activities in the sectors of the economy most affected by the coronavirus pandemic.

Such a right is granted in respect of fixed-term lease agreements prior to the introduction of the high alert regime due to the spread of coronavirus in the corresponding region.

A lease agreement must cover a building or a block, non-residential premises or their parts, used to carry out activities included in the list of the most affected sectors.

Under such lease agreements, tenants have the right to demand a rent reduction for a period of up to 1 (one) year. The amount of discount is not specified in the law - this issue should be agreed upon by the parties.

If the parties do not reach an agreement within 14 business days from a request, the tenant has the right to withdraw from the contract.

Renunciation of a rental agreement is declared in accordance with Art. 450.1 of the Civil Code of the Russian Federation: that is, one should send a notice of renunciation of the agreement without recourse to the court; the agreement is terminated from the moment of receipt of this notice.

A security payment, if provided for by a lease agreement, is not refundable to the lessee.

Losses in the form of lost profits and losses upon termination of the contract, as well as other amounts related exclusively to its early termination, are not levied from the tenant.

Extension of lease of state and municipal property

Good-faith tenants of state or municipal real estate (with the exception of land plots, which are covered by a separate clause of the law) received the right (and landlords, respectively, the obligation) to extend state and municipal property lease contracts for up to 1 (one) year without competitive tendering and on favorable terms: on the same conditions or on other conditions that do not worsen the position of the tenant.

Conditions for the forced extension of a lease (on the same terms or on other conditions that do not worsen the tenant's situation):

  1. The lease agreement was concluded based on tender results.
  2. The contract was concluded before the introduction of the high alert or emergency regime in the relevant region.
  3. The tenant duly performed its duties under the lease agreement until the introduction of the corresponding regime.
  4. A supplementary agreement is concluded without tendering and evaluating the market value of the leased property.
  5. The extension period is up to 1 (one) year.

Source: Federal Law dated 08.06.2020 No. 166-FZ "On Amending Certain Legislative Acts of the Russian Federation in order to take urgent measures to ensure sustainable development of the economy and prevent the consequences of the spread of a new coronavirus infection" entered into force on 08.06.2020



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