Many clients come to us with what is probably the most difficult dilemma that tenants of premises located in shopping centres in our country have faced in recent days: is it worth submitting declarations extending lease agreements based on Article 15ze of the special act?
💡 Key takeaways
- Extending the lease under Article 15ze provides certainty of exemption from rent during lockdowns and helps avoid disputes, but it artificially and for a long time (up to 26 months) binds the tenant.
- Further lockdowns necessitate the re-issuing of declarations and, consequently, the continuous extension of the agreement.
- Signing the declarations significantly weakens the tenant's potential position in court if they later wish to claim rent reductions based on the rebus sic stantibus clause.
- A lack of extension leaves an open door to negotiate much more favourable terms in court, with the use of safeguards, although this involves dispute and court costs.
It seems that new legislation may be enacted at the next closure of shopping centres. However, there is a chance that this law will more favourably regulate the situation of those who have not signed the aforementioned declarations and annexes.
Is it worth submitting declarations extending lease agreements based on Art. 15z?
The choice is as follows: if you wish to extend the agreements linking you with the shopping centres by more than a year, because the retail outlets you run are generating significant profits and you are convinced that the shopping centres will retain their clientele, then perhaps making a declaration based on Article 15ze is a good choice – although this matter is also controversial. This issue is by no means straightforward, as a significant number of tenants are fighting to obtain greater rent reductions during non-lockdown periods. If you do not have such conviction, it is worth considering an alternative approach.
Advantages of extending in a shopping gallery based on Article 15ze
Premises lease agreement and its extension offers the tenant certain benefits in the form of:
- Resolving disputes/arguments with a landlord (until the next lockdown) and avoiding costly legal proceedings.
- 100%: it is certain that there is no obligation to pay rent for the periods during which lockdowns were in force (e.g. parts of November, December and January).
Disadvantages of extending a property lease agreement based on Article 15ze
- The necessity of extension commercial premises lease agreements for over 26 months, which is not the best idea in the context of declining footfall in shopping centres. Customers have learned to buy online.
- Lack of a comprehensive solution for subsequent lockdowns – the necessity of extending the contract for each subsequent period of total restrictions.
- If you only decide on legal action after the next closure, it will be much harder to defend against the argument: "Why did you voluntarily extend the contract under these terms several times?".
If you do not decide to submit a statement
The advantages of this approach include:
- Opportunity to reach an agreement on better market terms (e.g. lower fixed rent).
- The possibility of having one’s interests protected in court – recent case law has even seen rent reductions ranging from 50% to 75%.
- The possibility of obtaining long-term protection against landlord claims.
The disadvantages of this solution are:
- Legal costs (often amounting to around 5% of the annual rent).
- Uncertainty of winning and the necessity of paying interest in case of a loss.
- Ongoing dispute with the landlord, taxing for both parties.
Summary and contact
We have presented the advantages and disadvantages of extending lease agreements in exchange for rent relief. We have tried to make it easier for tenants to make this decision, but ultimately, the burden lies with them.
We invite you to ask further questions and contact our Office directly at biuro@klodzinskikancelaria.pl and phone number +48509259434.