In 2020, due to the coronavirus pandemic, the government has provided businesses in the affected industries with some support measures. For example, under Federal Law No. 98-FZ of April 1, 2020, the landlord is required to grant the tenant a deferral of rent payments for the entire year 2020. Decree of the RF government No. 439 dd. 03.04.2020 approved the requirements for terms and conditions of deferral of for rent payment under real estate lease agreements. The Presidium of the RF Supreme Court in Judicial Practice Review No. 2 dd. 30.04.2020 gave explanations, from what moment obligations of parties under a lease agreement are considered to be amended in terms of providing the tenant with rent deferral, and which grounds are sufficient to provide the tenant of immovable property with rent deferral.

The rent may be reduced by agreement between the parties. If the landlord refuses to comply with legal requirements, he or she will be compelled by courts. There are several examples:

- Rigla LLC was able to compel via the court Individual Entrepreneur Nasonova to conclude an additional agreement to the lease agreement to grant deferred lease payments. Arguments of the defendant that the plaintiff was not affected by the pandemic were left without attention (Decision of the Second Arbitration Court of Appeal of 18.12.2020 No. 02AP-8333/2020 in case No. A29-6898/2020);

- Courts dismissed claims of Nedvizhimost IC UES JSC against Individual Entrepreneur A.D. Dolgushev for recovery of debt under the lease agreement for the period from April to May 2020 due to the fact that the defendant was among the industries affected by the pandemic. Therefore, the landlord was obliged to grant a deferral of rent payments even without receiving a corresponding request from the tenant (Decision of the Third Arbitration Court of Appeal of 10.12.2020 on case No. A33-21531/2020);

- In another case, Perfecto Buket LLC managed to achieve exemption from rent payments in favor of Ostov Grad LLC in terms of utility payments included in the rent, because due to the introduction of a high alert regime in the region the defendant could not fully use the premises (Resolution of the Eighth Arbitration Appeal Court of 24.11.2020 No. 08AP-10145/2020 in case No. A70-10245/2020).

The resolution of issues between tenants and landlords is predominantly in the form of negotiations and sending letters, claims, appeals, etc. Usually, only disputes come to court if the following conditions are present: the lessee is given the possibility by law to demand a delay in rent, reduction of its amount or other requirements; the lessor's refusal to satisfy the lessee's demand. In addition, it should be taken into account that lessors of state and municipal property have more opportunities to reduce rents. It is not uncommon for a landlord to mistakenly believe that he has the right to defer or reduce the amount of rent. Then courts deny claimed claims.

Judicial practice in disputes between tenants and landlords during the pandemic can be assessed as uniform. There are no serious difficulties in the courts' assessment of circumstances of the case and parties' arguments. This is due to the fact that support measures in the form of deferral of rent payments and reduction of the rent amount can be used if there are conditions stipulated in the legislation, which are formulated very clearly. The court need only assess the existence of these conditions in a particular case and make a decision. Refusals to satisfy claims of tenants or landlords are thus not related to any bias or attitude of the courts, but are caused only by the plaintiff's incorrect assessment of all the circumstances of the case and the entitlements arising from them.

We believe that taking into account the current sanitary and epidemiological situation in many regions it is necessary to adjust the term for granting a deferral of rent payments, established in Decree of the RF Government No. 439. The postponement was in effect until October 1, 2020. But many enterprises in affected industries are still experiencing difficulties, since restrictive measures are still in effect practically all over the country to this day. And then the logic of the legislator is not clear: to declare support for business and at the same time to ignore the expiration of the most significant assistance. At the same time, we believe that it is inappropriate to establish any restrictions on the reduction of rents, because all lease contracts are different in content. The cost of the rent may vary from a few thousand rubles to hundreds of millions. Therefore, we believe that it should still be up to the parties to the agreement to decide on specific parameters for reducing the cost.

It is worth pointing out an unhealthy trend that has emerged in the practice of renting in connection with the coronavirus pandemic. Some tenants, referring to the pandemic, quite seriously demand full exemption from rent, while forgetting about interests of the landlord. The result is non-payment and rent collection courts, which more often agree with the landlord in assessing the situation. Tenants don't bother to study the law and, for some reason unknown to us, believe that the landlord is a charity that must pay for tenants' risks associated with drastic changes in market conditions. This is the wrong approach. 

When it comes to large members of the food service industry who worked in a pandemic but still demand rent deferrals or full rent waivers, there is nothing strange about their behavior. It is a common entrepreneurial desire to maximize profits through available legislative opportunities and loopholes. It is quite possible that they are counting on the use of formal conditions for granting aid, fixed in the law.

More details about the analytical material, case practice and expert opinion can be found in the sources on the Kommersant website in two articles:

Rent payment and Peace or lawsuit?

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