Leasing in Times of Pandemic

Faced with the economic crisis after the declaration of a State of National Emergency as a result of the COVID-19 pandemic, the National Government decided to implement, among many other actions, some measures related to leasing contracts.

These measures included the suspension of lease payments; increases in lease payments and late payment interest, as well as the suspension of the procedures for evictions for up to two months after the lifting of the state of emergency in the case of housing leases, and for up to one month after the lifting of the restrictions on the opening of the respective blocks and economic activities for commercial leases.

Although the legal provisions establish the right of lessees to suspend the payment of lease payments, this right does not apply automatically or in all cases.

• To qualify for such a measure, tenants must demonstrate that they are affected by the economic crisis caused by the COVID-19 pandemic.
• that they are unable to pay the agreed-upon lease payments.
• Tenants who have not been financially affected by the pandemic will not be eligible for the suspension.

On the other hand, the measures of suspension of the payment of lease payments do not result in the disappearance of the payment obligation or the cancellation of the existing debt, but rather in a temporary postponement or deferral of the payment of the lessee's obligations, for which the lessor and the lessee will agree on the payment conditions by means of a written agreement.   Such payment agreement will have a maximum duration of 2 years from the date of signature and/or registration of the agreement with the General Directorate of Leases of the MIVIOT.

A very relevant aspect of the suspension measures is that, in cases of leases of properties subject to the Horizontal Property Regime, the measure does not extend to the payment of the common expenses of the PH, which means that, even when the lessee avails himself of the suspension of the lease fee, he must continue to make the payment corresponding to the maintenance fee of the PH.

Finally, we would like to point out that, with respect to the eviction processes, they are suspended to the extent that they are aimed at evicting a tenant affected by the economic crisis caused by COVID-19 and who is unable to pay the corresponding rental fee.  However, it should be made clear that the eviction proceedings initiated prior to the declaration of the State of National Emergency, the eviction proceedings of persons not affected by the economic crisis caused by the COVID-19 pandemic and the eviction proceedings for trespassing and breach of contract, are excluded from the suspension measures issued by the National Government.

By

Lizbeth Villarreal

PR Lawyers