No obligation to pay rent for useless business premises during the lockdown


Mark Krenn, Partner

Marko Vladic, Associate

In its judgement 3 Ob 78/12y of 21 October 2021, the Austrian Supreme Court dealt for the first - but probably not for the last - time with the question of rent reduction during lockdown. With regard to a complete nonusability of business premises due to officially ordered prohibition of access, a first fundamental decision is now at hand.

Due to the officially ordered shutdowns during the first Corona lockdown in Austria, the operator of a tanning salon was not allowed to enter his business premises. As a result, the operator refused to pay the rent for April 2020 on the grounds that the business premises could not be used in its entirety due to the prohibition of access. The landlord took the opposite position and the case was taken to the highest court. However, the landlord's appeal was unsuccessful.

According to §§ 1104, 1105 ABGB, in the case of extraordinary circumstances, such as epidemics, the rent for the property is partially or totally reduced. In accordance with some of the legal opinions, this also applies to tenancies affected by the prohibition to access the premises. In his view, the COVID 19 pandemic is to be regarded as an epidemic. Since extraordinary circumstances can also result directly from sovereign orders, the official measure according to which a business premises may not be used at all constitutes such an elementary occurrence. Therefore, in principle, there is a reduction in rent.

The operator of the tanning salon only left his furniture (in particular the tanning beds and decoration) in the existing property during the prohibition of access. Partial use can only exist if a limited utilisation (e.g. for storage purposes) comes into consideration, in any case if this is necessary or reasonably possible. The mere leaving of the inventory in the business premises does not constitute a use of the property for the contractually agreed business purpose, so that a complete nonusability and thus a complete rent reduction is to be assumed.

In addition, the Supreme Court argued that § 1104 ABGB also covers those cases that do not affect the physical substance of the rented property. Thus, elementary occurrence - such as an epidemic - are the typical examples of § 1104 ABGB that lead to the waiver of rent.

However, some questions remain open. For example, the Supreme Court has not clarified how the partial usability of the property - e.g. by offering a take-away service - is to be assessed during the lockdown. There is also still uncertainty as to whether state aid such as the fixed cost subsidy is to be passed on to the landlord and whether this jurisdiction also applies to tenancies.