Of interest.

The prohibition on lease contract termination was approved in an amended form by the Parliament of the Czech Republic

In our article dated 6 April 2020, we reported on two government draft laws containing certain measures to mitigate the effects of the SARS-CoV-2 coronavirus epidemic on tenants of housing and business premises. As both draft laws have already passed the complete legislative process and undergone certain important changes during the discussion in the Parliament of the Czech Republic, hereby, we are updating our article and summarizing and evaluating the changes made in the draft laws.

On 22 April 2020, the Chamber of Deputies rejected the draft laws as amended by the Senate and approved both of these draft laws as previously submitted to the Senate. Today (24 April 2020), both draft laws were signed by President Miloš Zeman and are only awaiting their publication in the Collection of Laws.

First of all, let us emphasize that even the amended draft laws do not provide for any deferral of maturity or even waiver of rent, although some media still do not hesitate to present the approved draft laws in this way. On the contrary, in the approved wording, the draft laws contain an explicit warning that other rights of the landlord (apart from the right to terminate the lease agreement) arising as a result of the tenant’s delay are not affected in any way. Thus, a tenant who does not pay the rent on time, cannot avoid judicial enforcement of the due rent, including the statutory default interest.

In both draft laws, the duration of the so-called decisive period, during which any tenant’s debt on rent will not give rise to a legal reason for the landlord to terminate the contract by notice, was changed. In the case of housing premises, the decisive period will last a maximum of 31 July 2020, and in the case of business premises of 30 June 2020. In the case of housing premises, however, the end of the decisive period will fall on the day following the end of emergency measures in an epidemic, if it occurs earlier. Furthermore, the so-called protection period, in which the prohibition on lease contract termination for non-payment of rent at the decisive period applies, was significantly shortened only until 31 December 2020.

Other important changes concern only the draft law on housing premises. In points:

  • a specific form of evidence of the circumstances that caused the non-payment of rent was specified, namely as the special certificate from the competent labor office issued at the request of the tenant (no specific form of evidence is specified for business premises);
  • the original illogical provision on deferral of rents from fixed-term lease contracts that expire during the decisive period has been completely removed from the draft laws.

Despite the changes made to the draft laws, our concerns and reservations set out and elaborated in more detail in the original article of 6 April 2020 still remain. Furthermore, the definition of the term “emergency measures in an epidemic” was not very well-thought-out, which might become a serious issue as some emergency measures issued by the Ministry of Health of the Czech Republic,[1] which most often caused loss of income for tenants, do not fall within the given definition. This problem has now been at least partially solved by the decision of the Municipal Court in Prague dated 23 April 2020, No. 14 A 41/2020, by which the abovementioned measures of the Ministry of Health were declared illegal and annulled therefore. However, it cannot be overlooked that partly during the decisive period those measures were in force, the tenants complied with them and their inability to pay the rent properly may have arisen as a result of those measures. Hence, if the tenant refers to the measures of the Ministry of Health in question, which do not fall under the definition of an emergency measure in an epidemic, the approved draft laws will not protect him/her from termination of the lease by landlord’s notice, even if the intention of the legislator was obviously the opposite.

 

If you have any questions about this topic, please feel free to contact us at any time.

PhDr. Mgr. Jan Ptáčník, attorney – ptacnik@plegal.cz

 

www.peytonlegal.cz

24. 04. 2020

 

[1] Emergency measure of 23 March 2020, No. MZDR 12745 / 2020-1, on restriction of the free movement of people, and emergency measure of 23 March 2020, No. MZDR 12746 / 2020-1, on restriction of retail sales.

 

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