Czech Republic & LEX COVID & Measures Regarding Leases

By Ivan Sagál, Lubomir Brecka

05-2020

The Chamber of Deputies of the Czech Republic adopted on 22 April 2020 two draft acts in connection with the commercial as well as non-commercial leases and the ongoing COVID-19 pandemic proposed by the Government of the Czech Republic. Both approved acts were signed by the president of the Czech Republic on 24 April 2020 and were subsequently published on 27 April 2020 in the Collection of Laws in the Chapter 74 as Act No. 209/2020 Coll. and Act No. 210/2020 Coll. when they became effective.

Commercial leases

The draft act regarding the commercial leases stipulates that during the protection period lasting from the date of the effectiveness of this act, i.e. from 27 April 2020, until 31 December 2020, the landlord of the commercial premises cannot unilaterally terminate the lease solely on the ground of the lessee's default with the rent payment, if the default occurred:

  • in the decisive period, i.e. from 12 March to 30 June 2020; or

  • as a result of restrictions from extraordinary measures that prevented or significantly complicated the lessee to carry on the business.
    The lessee is obligated to submit the documents proving the above conditions to the landlord within 15 days of the first day of the default with the rent payment.

The lessee is then obliged to pay the due rent and any other due claims by the end of the protection period. Where the lessee fails to pay all debts on rent by the end of the protection period or declares that he will not pay them by the end of the protection period, the landlord has the right to terminate the lease with 5 days' notice period. If the rent terminates before the lapse of the protection period, the lessee is obliged to pay all due claims within 30 days from the rent termination.

The landlord may demand the cancellation of the lease, but not before the end of the state of emergency, if the lessee's restrictions resulted from extraordinary measures have expired and the landlord cannot be reasonably required to continue to bear the above mentioned restrictions.

The landlord's right to terminate the lease on other grounds and other landlord's rights related to lessee's default are not affected by the draft act.

Non-commercial leases

The draft act regarding the lease of apartment, house or their parts serving to meet the housing needs stipulates that during the protection period lasting from the date of the effectiveness of this act, i.e. from 27 April 2020, until 31 December 2020, the landlord of such premises cannot unilaterally terminate the lease solely on the ground of the lessee's default with the rent payment, if the default occurred:

  • in the decisive period, i.e. from 12 March to the day following the date of expiry of the extraordinary measure, but no later than 31 July 2020; or

  • mostly as a result of restrictions from extraordinary measures that prevented or significantly complicated the lessee to properly pay the rent.

The lessee is obligated to submit to the landlord without undue delay the confirmation regarding the above conditions issued by the competent labor office of the Czech Republic.

Where the lessee fails to pay the due rent in the protection period, the landlord has the right to terminate the lease without the notice period. The landlord has the right to terminate the lease even if the lessee declares or it otherwise becomes unquestionable that he will not pay these claims even during the protection period.

The landlord may demand the cancellation of the lease, but not before the end of the state of emergency, if the lessee's restrictions resulted from extraordinary measures have expired and the landlord cannot be reasonably required to continue to bear the above mentioned restrictions, in particular if, as a result of such restrictions, the landlord will not have the means for his sustenance or sustenance of his relatives. If the parties fail to agree on the above, the court shall decide on the cancellation of the lease.

The State Housing Development Fund may defer, on the request of the debtor, the due date of the loan repayment and its accessories until 30 November 2020. The debtor is obligated to prove, that he is not able to pay the loan mainly due to the restrictions arising from extraordinary measure. The total repayment period of the loan will be extended by the period for which the due date of the loan repayment and its accessories is deferred.

The landlord's right to terminate the lease on other grounds and other landlord's rights related to lessee's default are not affected by the draft act.

We will keep monitoring the above mentioned draft acts as well as other adopting measures and we will keep you informed. In case of any questions regarding not only the above mentioned draft acts, we will be pleased to help you.

Last reviewed: 04 May 2020