Poland: Government anti-crisis package for COVID-19. Legal solutions for the real estate industry
After a period of anticipation, the Council of Ministers has published today comprehensive drafts of anti-crisis regulations. These are to be adopted by the Polish parliament at its next meeting scheduled for tomorrow, Friday, 27 March, thus starting the formal legislative path. We present a short selection of the most important legal solutions from the point of view of real estate entrepreneurs below.
LEASES IN SHOPPING CENTRES
- Rent – statutory reduction: Statutory reductions in rent by 90% for the duration of an epidemic or state of emergency for all tenants leasing space in retail complexes with a sales area of more than 2,000 m2 who did not conduct business during the above period and whose operations were prohibited or restricted by law.
- Rent – judicial intervention re statutory reduction of rent: Both tenants and landlords may apply to the courts to have the statutory reduction of rent changed; the court, if considerations of equity so require and after considering the interests of the parties, may determine the level of rent in accordance with the principles of community coexistence (public policy), setting the rent at more or less of the 90% (see above).
- Exclusions from the statutory rent reduction: The statutory rent reduction does not apply to tenants whose business is not prohibited or restricted by law (e.g. grocery stores or pharmacies) and those who, were carrying on a business despite the prohibition or restrictions.
- Tenancy agreements: A tenant may benefit re rent reductions from more favourable tenancy agreement provisions.
- Service charges: The statutory rent reduction does not apply to service charges.
LEASES – DURATION / NOTICE OF TERMINATION
- Statutory extension of leases: At the request of the tenant, the lease will be automatically extended until 30 June 2020. This rule relates to all leases concluded before the new regulations entered into force which would expire before 30 June 2020; the nature of the tenant’s activities or the location of the leased property (e.g. in the shopping centre or outside it) is irrelevant.
- Statutory extension of leases – exemptions: Tenants who have not performed or improperly performed their obligations under the lease during the time before the new regulations entered into force (e.g. if they are in arrears on payment of rent) will not be entitled to request an extension of the lease term.
- Termination of lease/rent increase – prohibition: Landlords will not be able to terminate the lease or increase the rent until 30 June 2020.
- Termination of lease – exceptions: The landlord’s right to terminate the lease or increase the rent will not apply in the event of a termination of lease with reference to:
(i) breach of contract or breach of legal regulations concerning the use of the premises by the tenant;
(ii) the necessity to demolish or renovate the building in which the premises are located.
- Termination of lease/rent increase – statements made before the entry into force of the new regulations: Statements regarding termination of a lease or rent increases that were made before the entry into force of the new regulations and which are to have effect before 30 June 2020 are effective; however, the termination will be postponed until 30 June 2020 at the tenant’s request.
TRADING BAN ON SUNDAYS AND PUBLIC HOLIDAYS
- Exceptions to the trading ban on Sundays: During a state of emergency or epidemic and within 30 days following their revocation, trading bans will not apply on Sundays in relation to the performance of trade activities consisting of unloading, receiving and displaying essential goods and entrusting an employee or employed person with the performance of such activities; an exemption from the ban under the new regulations will not apply on Sundays on which public holidays fall.
- Time limits for tacit settlement: The time limits for tacit settlement or in other case where the authority does not express an objection, entitling the party to take action (e.g. notifications in the case of construction work for which no building permit is required) will not start to run and time limits which have started to run will be suspended for the duration of the epidemic/state of emergency announced due to COVID-19.
- Certificate of no grounds for raising an objection: The authorities may issue a certificate of no grounds for raising an objection ex officio.
COURT AND ADMINISTRATIVE PROCEEDINGS
- Time limits under substantive laws: For the duration of a state of epidemic threat or epidemic due to COVID-19, the time limits provided for by civil and administrative law such as prescription, statute of limitations, respites and final time limits, will not start to run and time limits which have started to run will be suspended for this period.
- Time limits in court and administrative proceedings: For the duration the epidemic/state of emergency due to the epidemic announced due to COVID-19, the procedural time limits in court proceedings, including administrative court proceedings, will not start to run and any time limits which have started to run will be suspended for that period.
TAXES AND FEES
- Perpetual usufruct – deadlines for payment of the annual fee: The deadlines for paying the annual fee for perpetual usufruct will be moved from 31 March 2020 to 30 June 2020.
- Perpetual usufruct – deadlines for payment of the fee for the transformation of perpetual usufruct into ownership: The deadlines for payment of the transformation fee due for 2020 in connection with the transformation of perpetual usufruct rights into ownership will also be postponed until 30 June 2020.
- Real estate tax – exemption: By resolution of the local councils, exemptions from property tax could be passed for part of 2020, including for land, buildings and structures related to running a business, to designated groups of entrepreneurs whose financial liquidity has deteriorated due to them suffering negative economic consequences as a result of COVID-19.
- Real estate tax – extension of payment terms: The head of the local authority (mayor, city president, village head) may, by way of an ordinance, extend payment deadlines for designated groups of entrepreneurs whose financial liquidity has deteriorated due to them suffering negative economic consequences as a result of COVID-19, in relation to instalments on real estate payable in April, May and June 2020, but not later than until 30 September 2020.