Is it worth submitting declarations extending lease agreements based on Art. 15z?

Piotr Kłodziński|
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Infographic describing the possible actions regarding the termination of a lease agreement in a shopping mall
Infographic - courts are increasingly taking the side of tenants in disputes with shopping mall owners

If it is worth submitting declarations extending lease contracts based on Art. 15z?

 

Many clients come to us with what is probably the most difficult dilemma that tenants of premises located in shopping malls in our country have recently faced.

The choice is as follows - if you want to extend your contracts with shopping malls for more than a year, because the retail and service outlets you run bring such profits and you are convinced that shopping malls will maintain and perhaps even develop their clientele, it may be a good choice is to submit a declaration pursuant to Art. 15ze – although there is controversy on this issue as well. If, in your opinion, your business will bring more and more income in the future, the decision to extend it in exchange for rent relief seems almost obvious. This issue is not obvious at all, as a large group of tenants are fighting to obtain greater rent reductions during "lockdown-free" periods in exchange for such an extension.

If you do not have such a belief, it is worth considering choosing a different path. However, it is good to consider all the arguments for and against, advantages and disadvantages of each solution, which we present below:

Premises lease agreement. Advantages of extension in a shopping mall based on Art. 15ze:
-Ending an argument/dispute (until the next lockdown), avoiding a court dispute

-100% certain no obligation to pay rent for the period of lockdowns (part of November, December and January)

Disadvantages of extending the lease agreement for premises in a shopping mall based on Art. 15ze:

-Necessity of extension commercial premises lease agreements by over 26 months, this is not the best idea in the context of falling traffic in shopping malls. It will be difficult to maintain the profitability of stores with probably falling traffic in shopping malls in the coming weeks and years. This is not only due to epidemic problems, but also because people have simply learned to buy online and will not return to retail any time soon.

-No comprehensive solution for subsequent lockdowns - the need to extend the contract for each subsequent period of total restrictions

-If only after the next lockdown (if there is one) you decide to go to court to reduce the rent or terminate the contract, the chance of protecting the rule of law decreases dramatically. And although what is happening is putting tenants against the wall, it will not be easy for us or your other representatives to defend themselves against the argument "why have you extended the contract several times so far?" Although, of course, there are counterarguments to this. 

 

However, if you decide not to submit a declaration pursuant to Article 15ze, then:

-The chance of concluding an agreement on perhaps better terms increases at each further stage of the case
-The possibility of obtaining complete or much more far-reaching protection of your interests in court (recent reasonable judgments, taking into account the dramatically difficult situation of tenants, are optimistic - there are often protective provisions setting the fairest rents according to turnover or granting discounts of the order of 50% and 75%)

-Possibility to obtain long-term legal protection against the landlord's claims in court

Defects:
-Costs of legal proceedings (approx. 5% annual rent, although you can also start by applying for a protective order)
-Uncertainty of winning (and then the need to pay additional costs and interest)
-The ongoing dispute with the Landlord

It seems that a new law may be passed the next time shopping malls close. If this happens, I do not think it will seriously violate the commitments already made based on Article. 15 ze. However, there is a chance that this law will regulate the situation of those who did not sign it more favorably the above-mentioned declarations and annexes. However, the above is only an estimate, as the content of the future law is not known at this stage. 

Above, we presented the advantages and disadvantages of extending lease contracts in exchange for rent relief during lockdown periods. We have tried to make this decision as easy as possible for tenants, but ultimately no one will make this decision for tenants.

We invite you to ask additional questions and contact us directly biuro@klodzinskikancelaria.pl and by phone number +4850925943

Piotr Kłodziński
Legal Advisor Warsaw

 

Rate this post

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Infographic describing the possible actions regarding the termination of a lease agreement in a shopping mall
Infographic - courts are increasingly taking the side of tenants in disputes with shopping mall owners

If it is worth submitting declarations extending lease contracts based on Art. 15z?

 

Many clients come to us with what is probably the most difficult dilemma that tenants of premises located in shopping malls in our country have recently faced.

The choice is as follows - if you want to extend your contracts with shopping malls for more than a year, because the retail and service outlets you run bring such profits and you are convinced that shopping malls will maintain and perhaps even develop their clientele, it may be a good choice is to submit a declaration pursuant to Art. 15ze – although there is controversy on this issue as well. If, in your opinion, your business will bring more and more income in the future, the decision to extend it in exchange for rent relief seems almost obvious. This issue is not obvious at all, as a large group of tenants are fighting to obtain greater rent reductions during "lockdown-free" periods in exchange for such an extension.

If you do not have such a belief, it is worth considering choosing a different path. However, it is good to consider all the arguments for and against, advantages and disadvantages of each solution, which we present below:

Premises lease agreement. Advantages of extension in a shopping mall based on Art. 15ze:
-Ending an argument/dispute (until the next lockdown), avoiding a court dispute

-100% certain no obligation to pay rent for the period of lockdowns (part of November, December and January)

Disadvantages of extending the lease agreement for premises in a shopping mall based on Art. 15ze:

-Necessity of extension commercial premises lease agreements by over 26 months, this is not the best idea in the context of falling traffic in shopping malls. It will be difficult to maintain the profitability of stores with probably falling traffic in shopping malls in the coming weeks and years. This is not only due to epidemic problems, but also because people have simply learned to buy online and will not return to retail any time soon.

-No comprehensive solution for subsequent lockdowns - the need to extend the contract for each subsequent period of total restrictions

-If only after the next lockdown (if there is one) you decide to go to court to reduce the rent or terminate the contract, the chance of protecting the rule of law decreases dramatically. And although what is happening is putting tenants against the wall, it will not be easy for us or your other representatives to defend themselves against the argument "why have you extended the contract several times so far?" Although, of course, there are counterarguments to this. 

 

However, if you decide not to submit a declaration pursuant to Article 15ze, then:

-The chance of concluding an agreement on perhaps better terms increases at each further stage of the case
-The possibility of obtaining complete or much more far-reaching protection of your interests in court (recent reasonable judgments, taking into account the dramatically difficult situation of tenants, are optimistic - there are often protective provisions setting the fairest rents according to turnover or granting discounts of the order of 50% and 75%)

-Possibility to obtain long-term legal protection against the landlord's claims in court

Defects:
-Costs of legal proceedings (approx. 5% annual rent, although you can also start by applying for a protective order)
-Uncertainty of winning (and then the need to pay additional costs and interest)
-The ongoing dispute with the Landlord

It seems that a new law may be passed the next time shopping malls close. If this happens, I do not think it will seriously violate the commitments already made based on Article. 15 ze. However, there is a chance that this law will regulate the situation of those who did not sign it more favorably the above-mentioned declarations and annexes. However, the above is only an estimate, as the content of the future law is not known at this stage. 

Above, we presented the advantages and disadvantages of extending lease contracts in exchange for rent relief during lockdown periods. We have tried to make this decision as easy as possible for tenants, but ultimately no one will make this decision for tenants.

We invite you to ask additional questions and contact us directly biuro@klodzinskikancelaria.pl and by phone number +4850925943

Piotr Kłodziński
Legal Advisor Warsaw

 

Rate this post