Renegotiation and deferment of payment of local rents

Among the new features that the Royal Decree-Law 15/2020of 21 April, with additional urgent measures to support the economy and employment, with the aim of reducing the costs of SMEs and self-employed people, we can highlight the lease measures for non-housing use, such as leases business premises.

The measures adopted in DRL 15/2020 entered into force on 23 April. This standard incorporates more than 30 measures that strengthen the financing of companies, provide support in the tax field, facilitate the adjustment of the economy, and protect employment and citizens.

Among the measures to reduce the costs of SMEs and self-employedpeople, we now highlight the reference leases for non-housing use, such as business premises leases.

There are many economic activities that have been forced to suspend their activity or drastically reduce it as a result of the exceptional measures taken by Royal Decree 463/2020 of the state of alarm. So the lack of income or minority of them during the period that lasts the alarm status can result in financial inability to pay rent of rental premises, putting at serious risk the continuity of their activities.

Below we explain these developments in terms of leases for non-housing use, consisting of a moratorium on the payment of rent.

MORATORIUM RENT PAYMENT

1. Leases for non-housing use with large forks

Who can benefit from this moratorium? And since when?

the natural or legal person leasing a lease for non-housing use in accordance with Article 3 of Law 29/1994 of 24 November on Urban Leases, or industry, which meets the requirements of Article 3, may apply from the landlord, where this is a public housing company or entity, or a large fork, understanding by such the natural or legal person who owns more than 10 urban properties, excluding garages and storage rooms, or a constructed area of more than 1,500 m2, within one month s from April 23,the moratorium on the payment of rent to be accepted by the landlord provided that no agreement had already been reached between both parties of moratorium or reduction of income.

IMPORTANT: Leasing for non-housing use is considered to be a lease that, on a building, has as its primary destination a different one from the housing one. In particular, this consideration will be given to the leases of urban estates held by season, whether this summer or any other, and those held to carry out on the farm an industrial, commercial, artisanal, professional, recreational, welfare, cultural or teaching activity, whatever the people who celebrate them.

How will it be applied?

The moratorium on the payment of rent rent will be applied automatically and affect the period of time that the alarm status lasts and its extensions and the following monthly payments, which can be extended one by one,if that period is insufficient in relation to the impact caused by COVID-19, without being able to overcome,under any circumstances, 4 months.

Such income shall be deferred, without penalty or accrual of interest,from the following monthly rent, through the splitting of quotas within 2 years,which will be counted from the time the above-mentioned situation is exceeded, or from the the end of the 4 month period mentioned above, and always within the term of the lease or any of its extensions.

2. Leases for non-housing use with landlord natural person

the natural or legal person leasing a lease for non-housing use in accordance with Article 3 of Law 29/1994 of 24 November, or industry, whose landlord is not a company or public entity or large fork, andmeets the necessary requirements, may request from the landlord,in the period of 1 month from 23 April 2020, the temporary and extraordinary postponement in the payment of the rent provided that such deferment or a reduction in income had not been agreed by both parties on a voluntary basis.

Only under the agreement referred to in the previous paragraphs, the parties may freely dispose of the bond which may be used for the full or partial payment of any or all monthly rent. If it is fully or partially available, the lessee must replenish the amount of the security provided within one year of the conclusion of the agreement or within the period of validity of the contract, if this period is less than one year.

3. What are the requirements to be able to access these moratoriums?

Self-employed and SME tenants will have to meet the following requirements:

> In the case of a lease of a property affected by the economic activity carried out by the self-employed

(a) Be affiliated and in a position to discharge, on the date of the declaration of the alarm status by Royal Decree 463/2020, 14 March, which declares the state of alarm for the management of the health crisis situation caused by COVID-19, the Special Regime for the Social Security of Self-employed or Self-Employed Workers or the Special Regime for the Social Security of Sea Workers or, where appropriate, one of the substitute Mutualities of the EAR.
(b) That its activity has been suspended as a result of the entry into force of Royal Decree 463/2020 of 14 March, or by orders issued by the competent authority and the competent authorities delegated under that royal decree.
(c) In the event that its activity is not directly suspended as a result of the entry into force of Royal Decree 463/2020 of 14 March, the reduction in turnover of the calendar month prior to the request for deferment must be established by at least 75 per cent in relation to the average monthly turnover for the quarter to which that month referred to the previous year belongs.

> In the event of a lease of property affected by the economic activity carried out by an SME

(a) That the limits laid down in Article 257.1 of Royal Legislative Decree 1/2010 of 2 July, approving the consolidated text of the Law on Capital Companies, should not be exceeded.

I mean:

Balance sheet and statement of changes in net worth abbreviated to companies that for two consecutive years meet, at the date of closure of each of them, at least two of the following circumstances:

That the total items of the asset do not exceed four million euros.
That the net amount of your annual turnover does not exceed eight million euros.
That the average number of workers employed during the financial year is no more than fifty.

Companies shall lose this power if they cease to gather, for two consecutive years, two of the circumstances referred to in the preceding paragraph.

(b) That its activity has been suspended as a result of the entry into force of Royal Decree 463/2020 of 14 March, or by orders issued by the competent authority and the competent authorities delegated under that royal decree.
c) In the event that your activity is not directly suspended under Royal Decree 463/2020 of 14 March, the reduction in your turnover of the calendar month prior to which the deferment is requested by at least 75 per cent in relation to the average monthly turnover for the quarter to which that month referred to in the previous year is requested.

4. How are the requirements accredited?

It shall be credited by the lessee to the landlord by submitting the following documentation:

(a) The reduction in activity shall initially be established by the submission of a responsible declaration in which, on the basis of accounting and income and expense information, the reduction in monthly invoicing is recorded by at least 75 per cent in relation to the average monthly invoicing of the same quarter of the previous year. In any case, when required by the landlord, the tenant will have to show his ledgers to the landlord to prove the reduction in activity.
(b) The suspension of activity shall be established by means of a certificate issued by the State Agency of the Tax Administration or the competent body of the Autonomous Community, where appropriate, on the basis of the declaration of cessation of activity declared by the person concerned.

5. Consequences of the improper application of temporary and extraordinary deferral in the payment of income.

Tenants who have benefited from temporary and extraordinary deferment in the payment of income without meeting the requirements set out in the standard shall be liable for any damages that may have occurred, as well as for all expenses generated by the application of these exceptional measures, without prejudice to the responsibilities of another order to which the conduct thereof could give rise.