Rent Exemption for Companies due to the Coronavirus?

Many Are Currently Facing this Existential Question

Many companies, in particular retailers and caterers who rent their business premises, as well as landlords, are currently concerned with the question: Is rent still payable despite the business closures or business restrictions ordered by the Federal Government?

In §1104 of the ABGB (Austrian Civil Code) the tenant has the right to reduce the rent due to extraordinary circumstances; in the case of complete non-usability even down to zero. Extraordinary circumstances include fire, war, floods, but especially an epidemic. The COVID-19 pandemic will probably be classified as such a disease and thus as an extraordinary circumstance in the sense of §1104 ABGB.

The question of whether and to what extent the usability of the rented object is restricted must be based on the specific business purpose for which the rented object was rented (e.g. operation of a hairdresser's salon, restaurant). However, a complete exemption from rent for the duration of the ordered closure would only be conceivable for a business premises which becomes completely unusable due to the governmental ban on entering the premises. If there is "only" a restriction of use as the business premises can still be used in part, it will be necessary to investigate to what extent the restriction of use exists. To this extent, a partial rent reduction for the duration of the restriction could take place.

However, it should be noted that in any case the provision of §1104 ABGB is not mandatory law. It can therefore be contractually agreed that in the event of an epidemic or other extraordinary circumstances the rent is still payable. A final answer to the question whether a partial exemption from the obligation to pay rent has occurred can therefore only be given on the basis of the respective lease agreement.

We therefore recommend that you have your rental agreement subjected to a legal review. This applies equally to landlords and tenants. We are at your disposal for this.