If I have had to close my business, forced by the state of alarm decreed by the spanish Government, or by restrictions imposed by my Regional Autonomous Community, can I request to stop paying the rent for my business?

A Madrid Court has applied a clause that we have been listening to for months, since the health crisis began: the rebus sic stantibus clause, and that, as a consequence of the serious impact that the COVID 19 pandemic has caused to the rental relationship that unites the parties, has been forced on this occasion, through the courts, to restore the contractual balance. That is, having affected the pandemic, as an unpredictable event when the rental contract was signed, and which has affected in an extraordinary and intense way the general economic situation and the activity of businesses when the state of alarm was approved, which supposed the confinement of the population and the suspension of the activity of the shopping centers, and which was extended on several occasions, maintaining the closure of the shopping centers or being authorized with restrictions during the so-called “de-escalation” and return to the “new normal”, A nightclub has been allowed, as a precautionary measure, to stop paying rent while it is closed due to the pandemic, and when it opens, it will only have to pay half the rent. It is understood, therefore, that the health crisis has substantially changed the conditions of the contract.

Businesses affected by an unpredictable and supervening alteration such as the Covid-19 pandemic, can use the rebus sic stantibus clause to modify the contractual conditions previously agreed with their landlord.

Therefore, and based on an unpredictable and supervening alteration to the circumstances that existed at the time the commercial premises lease was signed, motivated by the pandemic that has extraordinarily affected the commercial activity that had been carried out in the leased premises, the contractual conditions regarding the payment of the rent of the business premises are modified, as a way of helping the tenant so affected by the health crisis.

In this case, the Judge has taken into consideration ​​that the business, a nightclub affected by the forced closures of the state of alarm caused by Covid-19, being deeply affected by the economic and financial crisis, and the economic forecasts being very negative until the year 2022, there may be a clear risk of insolvency for the tenant, causing the landlord of the premises to be able to execute the guarantee, agreed as a guarantee in the lease, and even for the owner of the premises to include the tenant in a debtors list, as a consequence of the non-payment of rents in different months, which would prevent the club from resorting to external financing.

In this case, the nightclub, lessee of the business premises, has seen its claims upheld thanks to the filing of a precautionary measure prior to the lawsuit, alleging reasons of urgency or necessity, arising from the extraordinary and unpredictable situation suffered due to the pandemic.

By means of a precautionary measure, the business is exempt from paying the rent for the business premises, since there is a clear risk of insolvency for the tenant, in which case the lessor can execute the guarantee and include it in the debtors lists, and the business cannot , in this case, seek external financing.

In summary, the Madrid court has ruled:

• The suspension of the power of the owner of the premises to enforce the guarantee – the guarantee of the lease -, judicially or out of court, to collect amounts owed or readjusted by the court ruling.
• If the guarantee has already been executed, the obligation of the lessee to have to grant a new guarantee to keep the corresponding amount guaranteed will be suspended.
• The landlord is prohibited from including the tenant club in debtors lists, such as the ASNEF, as a result of non-payment of amounts owed.

If you are going to rent a business premises or a home, do not hesitate to contact the Pérez Parras Economists & Lawyers Firm, with offices in the center of Malaga and Nerja. We are experts in leasing of homes and commercial premises, sales and conveyancing, claiming amounts owed, vacations and drafting of lease contracts.