Austria: Potential consequences of COVID-19 on Lease Agreements

Austria: Potential consequences of COVID-19 on Lease Agreements

Whether you are a landlord or a tenant, you may be affected by the current directive of the Federal Ministry of Health and Social Affairs that certain businesses, mostly retail shops, may not be entered by customers for shopping purposes. This restriction is in force until 22 March 2020, but it may be assumed that this measure will be prolonged.

In the media it is currently discussed, whether the current situation permits tenants the withholding of the payment of their rent, if they are forced by the directive to prohibit customer transactions within their premises. The Austrian Civil Code at first sight permits such withholding, however, the situation is not as clear as purported in media. There are many possibilities that the withholding is NOT permitted, as for instance the respective legal provision can be excluded by the parties beforehand in their lease agreement. But there are also other circumstances which exclude application of the relevant provision from the beginning.

As always, a careful case by case analysis has to be conducted in order to avoid costly disputes or the risk of termination of the lease agreement by the landlord for the non-payment of rent.

The Real Estate experts of CERHA HEMPEL are available to assist in such analysis.

Stay safe, stay home!