Aside from a complete closure, a partial "unfreezing" of the catering industry presents entrepreneurs with the spectre of a slow and painful bleeding of their capital. Restaurateurs are immediately faced with drastic regulatory requirements (spatial arrangements between tables limiting the number of seats, expensive disinfectants, bans on serving shared tables). All of this results in a radical drop in revenue. In light of this, does it become possible, and even legally mandatory, to demand a reduction of the base rent for the premises from the landlord?
💡 Key takeaways
- The best solution, because it is quick and free from costly court proceedings, serving long-term interests, is to conclude Rent reduction agreements (Addendum) following bilateral negotiations and understanding of the property owner.
- The key legal and judicial weapon against obdurate landlords is rebus sic stantibus clause (art. 357¹ Civil Code). It assumes a profound judicial correction of rents as a result of an "Extraordinary Change in Circumstances" (such as epidemics, natural disasters, and drastic changes in market economy regulations).
- The spatial utility limitations of a premises for generating revenue provide an argument for the existence of so-called subsequent partial impossibility of performance.
Regardless of the introduction of bans and sanitary amendments that hit restaurants – the market is being destroyed by the all-encompassing fear of consumers. When you suddenly cannot admit guests, and your tables stand forcibly empty due to the stringent distance requirements – from the perspective of Civil Law, your "rented premises have partially lost their ability to provide services."
How to get a rent reduction for a catering business during a crisis?
Outline of the problem
From the perspective of the catering industry, the defrosting of the aforementioned sector during the pandemic can only be described as a painful, flawed stopgap. Table restrictions or expensive plexiglass barriers are stifling budgets, and regular customers, driven by panic, have settled in for good with takeaways. in delivery at reduced margins for drivers.
Turnover stands at between 30% and, remarkably, 50% of the historical norm to date, on the basis of which the ‘sky-high, metropolitan market rent figures in the tenancy agreement’ were precisely calculated. Liquidity must be safeguarded to prevent these companies from going under, having been pushed by the state into a spiral of bankruptcies.
Rent renegotiations and a clever plan for an addendum
Savvy Landlords know that the market for bankrupt businesses is like a slaughterhouse. It is better for a landlord’s interests to agree, for example, to a loss-making 40% discount from a tenant who is a friend and is still fighting to stay afloat– a restaurateur – than to drive them into insolvency and be left with a huge, expensive-to-maintain, deserted corner on a dead-end street, having to search for someone to take over that spot with a torch in hand.
A sensible safeguard for negotiations conducted with the support of a lawyer is to create a so-called Rolling Annex: The rent will be drastically reduced only then – until government restrictions in the district affect us, or profits from reports push the limit, with the market revival – we will automatically switch to the old multiplier..
In the absence of agreement: *rebus sic stantibus*
For the most stubborn Landlords, the Polish code has equipped legal advisors with a tool of destruction (Art. 357¹ of the Civil Code). The provision forms the foundation – a modern state does not tolerate the practice of "injustice and unfairness" based on old agreements, if objectively extraordinary, independent, and incalculable events have occurred.
Both distinguished lawyers (P. Machnikowski) and more recent views from the Judiciary itself (e.g., the Courts of Appeal in Krakow or Gdansk) have issued case law: Epidemics, market crashes, mass strikes, or brutal, unexpected changes in regulations are flagship examples of gross loss, where the sole and almighty Court arbitrarily rules in a judgment to reduce rent or terminate an inadequate contract for the client.
Subsequent partial impossibility of performance and defects of the premises
In accordance with Article 495 § 2 of the Civil Code, the tenant has the right to be released from the obligation to pay the full rent if the landlord inadequately provides them with the premises. While the property owner is not personally at fault in any way here (they haven't curtailed the number of customers with scissors) – subjectively This month, do not supply the commercial Tenant with goods for "a large hall with the right to accommodate 100 people there". A partial reduction in the usefulness of the premises opens up grounds for immediate cost reduction claims.
FAQ i pomoc Kancelarii
- Should landlords lower rents? Yes! On the hard legal road, they will have to back down with great costs and legal proceedings months in the background, which is why sensible people save their good and regular payers through flexible settlements.
- Do restaurant tenants win in court? We are dealing with a definition of an extraordinary change in circumstances, both in nature and in the Council of Ministers' regulations. Claims are therefore extremely justified and logically powerful for businesses. Rebuilding after lockdown is months of struggle.
- Can you claim a refund for money already paid? Often yes (although it requires a thorough analysis of the agreement), the law in this area is strict but promising.