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Commercial tenant suspending payment of rent

Wednesday 25/03/2020
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The Ministerial Decree of 18 March 2020 requires the closure of all non-essential shops and restaurants. The majority of these entrepreneurs do not own the premises in which the activities are carried out.

There are already letters circulating from commercial tenants informing their landlords that they are suspending payment of the rent because they would be unable to meet their obligations as a result of the government's decision.

However, the government's decision to close certain shops and restaurants does not constitute a situation which makes it impossible for the tenant to pay the rent.

It is not unreasonable to expect the lessee to have a financial buffer and/or credit facilities to bridge temporary difficulties. A temporary measure taken by the government does not yet give the tenant the right to charge a - even drastic - decrease in turnover to the landlord.

The impossibility of delivery of specific goods can therefore not be equated with the impossibility of delivery of generic goods (e.g. money). Under Belgian law, on the basis of the adage "genera non pereunt", it is accepted that an undertaking to supply replaceable goods is not made impossible by the mere fact that the goods have disappeared or been destroyed. A defaulting party will therefore never be able to demand that it be released from its obligation to pay on the grounds of force majeure.

However, there is no doubt that this will still be a matter for discussion in case law in view of the unseen circumstances as a result of the coronavirus.

If the measures were to remain in place for a longer period of time, it may also be argued that the free enjoyment of the premises by the government order to close them is no longer guaranteed and that this could constitute a situation of force majeure in the course of time. However, this is a dangerous situation since the question then arises as to whether the landlord-owner could also apply this reasoning to the redemption of the mortgage loans.

If you have other questions regarding the Corona crisis, please visit our special FAQ

Last update: 30/04/2020

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Bert Lutin
Bert Lutin
Partner Tax & Legal Services