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COVID-19 and lease: reflexions and recommendations

Catherine Saint Geniest

Donors are concerned both about their obligations in the face of the current coronavirus outbreak and also about the demands that may come from stakeholders affected by the outbreak. The impact of several legal concepts needs to be addressed.

The obligation to guarantee the safety of the lessee (i) and the more general obligation to deliver the leased property (ii) justify the introduction of precautionary measures by lessors of multi-tenant buildings. Moreover, (iii) clauses relating to unpredictability may disrupt the contractual relationship between lessor and tenants.

(i) SAFETY OBLIGATION

Article L127-1 of the Building and Housing Code provides that “the owners, operators or occupents, as the case may be, of residential buildings and administrative, professional or commercial premises must, when the importance of these buildings or premises or their location justifies it, ensure the guarding or surveillance thereof and take measures to avoid obvious risks to the security and tranquillity of the premises”.

Moreover, case law has a long recognition of a contractual obligation of means on the part of the lessor to ensure the safety of the tenant (Court of Appeal of Pau, 12 June 2019, No. 17/00265; Court of Appeal of Nancy, 5 September 2017, No. 14/03043 – see for a founding judgment, Civ. 3e, 21 Nov. 1990, No. 89-15.922). A lessee who complains of a breach by the lessor on this count would have to establish that the means of maintaining security in the building have not been implemented.

(ii) REAL ESTATE USING RIGHT

The obligation of Real Estate using right resulting from Article 1719 of the Civil Code is a fundamental obligation of the lessor and requires the lessor to allow the teant to peacefully enjoy the leased property throughout the term of the lease.

The Court of Cassation regularly recalls the imperative nature of this obligation to deliver (Cass. Civ. 3e, 18 Jan. 2018 no. 16-26.011) and has been able to point out that it includes the common parts of a shopping centre qualified as “necessary accessories for the use of the leased property” (Cass. Civ. 3e, 19 Dec. 2012 no. 11-23.541).

The lessor must therefore implement the necessary means to:

  • Ensuring the safety of the tenant;
  • That the lessee may enjoy the leased thing, including the common areas, throughout the term of the lease.

Suggestions can be made within the framework of the means that can be implemented by the lessor:

  • Posting in the common areas of the building of the sanitary rules to be respected according to the government’s recommendations,
  • Requests tenants to report cases of illness among its staff and reminds them of the rules of containment,
  • Reinforcement of the cleaning/disinfection in common areas (in particular lift buttons, door handles, digicodes, stair railings…),

Provision of hydro-alcoholic solutions in the common areas.

(iii) CAN THE TENANT BE EXEMPT FROM PAYING RENT BECAUSE OF THE PANDEMIC?

The tenant could attempt to invoke the unpredictability of the current situation to request an exemption from payment of all or part of the contractually agreed rent.

Contracts entered into prior to 1 October 2016 are subject to the classic case law refusing to generally accept the theory of unforeseeability since the so-called Canal de Craponne ruling of 6 March 1876 handed down by the Court of Cassation.

For leases concluded since 1 October 2016, each party may invoke the benefit of the revision of the financial conditions of the contract, on the basis of Article 1195 of the Civil Code, if a “change in circumstances unforeseeable at the time of the conclusion of the contract makes performance excessively onerous for a party who had not agreed to assume the risk“.

The unpredictability of an event must be assessed on the day of the conclusion of the contract in accordance with Article 1218 of the Civil Code. Moreover, the condition of performance that has become “excessively onerous” for the lessee is strictly assessed (see in particular a decision of the Toulouse Court of Appeal of 3 Oct. 2019, no. 19/01579, regarding the impact of outbreak of avian influenza deemed insufficient on the farm operation in the case of a agricultural lease).

Article 1195 of the Civil Code is suppletive of the will of the parties, so that certain leases exclude the application of its provisions.

The exclusion of the provisions of Article 1195 of the Civil Code means, for the lessee, the impossibility of asserting unforeseeable circumstances that could justify a modification of the lease by the judge in order to lighten his contractual financial obligations.