Suspensions of your commercial rents' payments for the 2nd quarter 2020
Suspensions of your commercial rents' payments for the 2nd quarter 2020
The measures announced by the President of the Republic on Monday evening to protect SMEs included the "suspension of water, gas and electricity bills as well as rent". Although we are waiting to find out the exact details of this measure in relation to the payment of business rents during the lock-down period, while some institutional landlords have announced suspension measures in favour of local businesses, here are some immediate legal considerations on the matter.
1. An order has prohibited your premises from opening
As such, you may suspend the payment of your rent as from Q2 2020 invoking a force majeure event and the defence of non-performance in Article 1220 of the French Civil Code. It is strongly advised that you notify your landlord of this suspension and that you comply, in general, with the procedure described in the lease, where applicable, in case of force majeure.
2. Your business revenue has decreased
You can only be absolved from your obligation to pay your rent if payment is impossible due to the coronavirus epidemic.
Even if your business is in great difficulty, if you have the necessary resources to pay your rent, you will not be able to benefit from force majeure and must therefore fulfil your obligations.
If you are in a situation of significant loss of turnover, you are therefore advised to notify your landlord of the suspension of your rent on the basis of force majeure, in accordance with the procedure described, where applicable, in the lease, seriously documenting your inability (and not just difficulty), in financial and accounting terms, to pay your rent during the lock-down period.
Another avenue under Article 1195 of the French Civil Code stipulates that you can renegotiate your lease with your landlord in unforeseeable circumstances. That provision could apply in full to the coronavirus epidemic but it assumes that the lease was signed or renewed after the entry into force of that law, i.e. after 1 October 2016.
If you need any answers to your questions, please do not hesitate to contact your BDO contact person who will analyse your situation and advise you on any formal notice to be sent to your landlord.
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