As said in previous articles, the pandemic (Covid) has brought with it numerous regulations. Some of them forced the closure of hotels, bars and restaurants, gyms, etc. Many of them have been able to negotiate a rent reduction.
But, if it has not been possible to agree on a reduction, it can be asked or claimed for in court.
Agreements are to be fulfilled. Pacta sunt servanda
There is a principle in Spanish law, enshrined in the civil code: Pacta sunt servanda. That is, the contracts are to be fulfilled. Thus, Spanish law indicates that:
– The agreement has the force of law between the parties, and must be fulfilled.
– The agreement and its consequences must be complied with, etc.
But there is an exception.
Rebus sic stantibus.
The expression Rebus sic stantibus means: things being like this. So, contracts must be considered according to the circumstances in which they were signed. Consequently, although they must be fulfilled, it could happen that there are extraordinary changes. Thus, a change, which could not be foreseen, and is radical, can justify a modification of the contract. And therefore, a change of the obligations of the parties.
Rent reduction due to current circumstances
It is clear that the global Covid crisis, and its consequences, could not be foreseen. Many landlords and tenants have agreed to lower rents. But sadly, not all.
But, as indicated, it is possible, in the event of a lack of agreement, to request from the competent court a reduction, delay or even suspension of the obligation to pay the lease.
This request can be made as a main request, but also as an interim measure. That is, the payment obligation is suspended or reduced, while the court is dealing with the case.
Obviously, it is essential to prove the change in circumstances and how it was influenced in the specific case. And it is an unpredictable change. Each case is different, and it is vital that evidence is provided to justify the modification of what was agreed by the parties.
Court precedents.
Since the start of the pandemic, several courts have agreed to the reduction, temporary suspension or postponement of the rental rent.
As said by the Spanish Supreme Court, the rebus sic stantibus rule:
– tries to solve the problems derived from a sudden alteration
– that absolutely increases the cost of one of the parties
– or even frustrates the very end of the contract
Conclusion
If you have leased a business premises, and the crisis has affected you greatly. If it has not been possible to reach an agreement for the reduction of your rent. Know that if the requirements are met, you can request a reduction in the competent courts.
If you want legal advice on real estate judicial law, contact us.
The information provided in this article is not intended to be legal advice, it merely conveys information related to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
E-mail: info@white-baos.com
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