EXTRAORDINARY MEASURES AIMED AT LEASING BUSINESS PREMISES

Extraordinary measures aimed at leasing business premises

Here we reproduce what is said in the Royal Decree-Law 35/2020 of 22 December on urgent measures to support the tourism sector, the hotel industry and commerce, and on tax matters.

Leases for use other than housing with large forks.

1. In the absence of an agreement between the parties for the temporary reduction of rent or a moratorium on its payment, the individual or legal entity renting a lease for use other than housing, in accordance with the provisions of Article 3 of Law 29/1994, of November 24, on Urban Rentals, or industry, that meets the requirements set forth in Article 3 of this Royal Decree-Law, may, before 31 January 2021, apply to the lessor, when the latter is a company or public entity, or a large holder, understanding as such the individual or legal entity that owns more than 10 urban properties, excluding garages and storage rooms, or a built area of more than 1. 500 m2, one of the following alternatives:

a) A 50% reduction in rental income for the duration of the state of alarm declared by Royal Decree 926/2020, of 25 October, which declares the state of alarm to contain the spread of infections caused by SARS-CoV-2, and its extensions, and may be extended to the following months, up to a maximum of four months.

b) A moratorium on the payment of rental income which will be applied during the period of time that the state of alarm is declared by Royal Decree 926/2020, of 25th October and its extensions, and may be extended to the following months, up to a maximum of four months. Said rent will be deferred, without penalty or accrual of interest, from the following monthly rental payment at the end of the period indicated in section 3. The deferred payment of rent may be made during a period of two years starting from the end of the moratorium, and always within the period during which the rental contract or any of its extensions continues to be in force, with the amounts deferred being distributed proportionally throughout the period.

What does this mean? We think that in general the owner is more interested in the moratorium of the payment and thus not to lose money. It is a temporary relief for the tenant but a pressure when the good times are supposed to return.

2. In cases where the rental contract provides for the payment, in addition to the rental income, of other expenses arising from maintenance or other services, and from which the tenant benefits, these common expenses are excluded from the measures provided for in the previous section.

3. The lessor shall expressly communicate his decision to the lessor within seven working days after the request has been made by the lessor by a reliable means. From the next rental payment at the end of this period, the measure chosen by the lessor from among those described in sections a and b of paragraph 1 will be automatically applied, or, in the absence of express communication within the period, that requested by the lessee.

4. If the parties have reached an agreement on the reduction of rent or the moratorium on its payment that affects only part of the period covered by the alarm state declared by Royal Decree 926/2020 of 25 October and its extensions, as well as a maximum of four months after the end of the last extension of said alarm state, paragraphs 1 and 2 of this article will also be applicable, but the corresponding measure provided for in paragraph 1 will be applied only for the part of the period not affected by the agreement of the parties.

Other rentals for use other than as a dwelling

1. The natural or legal person who is the lessee of a rental contract for use other than as a dwelling in accordance with the provisions of Article 3 of Law 29/1994, of 24th November, or of industry, whose lessor is different from those defined in Article 1, and who fulfils the requirements laid down in Article 3, may request from the lessor, before 31st January 2021, the temporary and extraordinary postponement of the payment of the rent, provided that this postponement or a reduction in the rent has not been voluntarily agreed by both parties.

What does this mean? The decision is in the hands of the landlord and he is not obliged to accept any agreement.

2. Exclusively within the framework of the agreement referred to in the previous section, the parties may freely dispose of the deposit provided for in Article 36 of Law 29/1994, of 24 November, which may be used for the total or partial payment of some or all of the monthly rent. If the deposit is totally or partially available, the tenant must replace the amount of the deposit within one year of the conclusion of the agreement or within the remaining term of the contract, if this term is less than one year.

Requirements for self-employed workers and small and medium-sized rental companies for the purposes of Articles 1 and 2.

Self-employed workers and SMEs renting property for use other than as a dwelling may access the measures provided for in Articles 1 and 2 when they meet the following requirements:

1. 1. In the case of a contract for the lease of a property that affects the economic activity carried out by the self-employed worker:

a) To be affiliated and in a situation of registration, on the date of the declaration of the state of alarm by means of Royal Decree 926/2020, of 25th October, in the Special Social Security Regime for Own Account Workers or Self-Employed Workers or in the Special Social Security Regime for Sea Workers or, where appropriate, in one of the Mutual Insurance Companies that replace the RETA.

b) That its activity has been suspended as a consequence of the entry into force of Royal Decree 926/2020, of 25 October, or by orders issued by the competent authority and the competent authorities delegated under the aforementioned Royal Decree.

c) In the event that the activity is not directly suspended as a consequence of the entry into force of Royal Decree 926/2020, of 25 October, proof must be provided of the reduction of the turnover of the calendar month prior to that to which the postponement or reduction of the income is requested by at least 75%, in relation to the average monthly turnover of the quarter to which the said month belongs referring to the previous year.

2. In the case of a property rental contract affecting the economic activity carried out by an SME:

a) That the limits established in Article 257.1 of the revised text of the Law on Capital Companies, approved by Royal Legislative Decree 1/2010, of July 2, are not exceeded.

b) That its activity has been suspended as a consequence of the entry into force of Royal Decree 926/2020, of 25 October, or by orders issued by the competent authority and the competent authorities delegated under the protection of the aforementioned royal decree.

c) In the event that your activity is not directly suspended by virtue of the provisions of Royal Decree 926/2020, of 25 October, you must accredit the reduction of your turnover of the calendar month prior to that to which the postponement or reduction of the income is requested by at least 75%, in relation to the average monthly turnover of the quarter to which that month belongs, referring to the previous year.

Very important. Accreditation of the requirements.

The fulfilment of the requirements established in the previous article, will be accredited by the person renting to the lessor by means of the presentation of the following documentation:

a) The reduction of activity will be initially accredited by means of the presentation of a responsible statement in which, based on the accounting information and income and expenses, the reduction of the monthly invoicing by at least 75 percent is stated, in relation to the average monthly invoicing of the same quarter of the previous year. In any case, when the lessor requires it, the lessee will have to show his accounting books to the lessor to prove the reduction of activity.

b) The suspension of activity will be accredited by means of a certificate issued by the State Tax Administration Agency or by the entity competent to process the extraordinary cessation of activity regulated in article 17 of Royal Decree Law 8/2020, of 17 March, on urgent extraordinary measures to deal with the economic and social impact of the COVID-19, if applicable, on the basis of the declaration of cessation of activity declared by the interested party.

Consequences of the improper application of the reduction and the temporary and extraordinary deferment of payment of the rent.

Hirers who have benefited from the reduction and temporary and extraordinary deferment in the payment of rent without meeting the requirements established in Article 3 shall be liable for any damages that may have been caused, as well as for all the expenses generated by the application of these exceptional measures, without prejudice to the responsibilities of another nature to which their conduct may give rise.

Exclusion of the application of the measure to lessors in insolvency proceedings.

1. The provisions of Article 1 shall not be applicable when the lessor is in insolvency proceedings or when, as a result of the application of the measures provided for in said Article, the lessor is likely to become insolvent or is facing imminent or current insolvency, in accordance with the provisions of Royal Legislative Decree 1/2020, of 5 May, which approves the revised text of the Insolvency Law.

2. The lessor who intends to apply this Article 6 must prove that he is in one of the situations envisaged in it.