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COVID-19 Restrictions and Property Lease

Isn’t It About Time to Amend Anti-COVID Law?

The more numerous and stricter the government's anti-pandemic measures become — from mandatory days off "on the house" and QR code feis kontrol to curfews and total lockdowns — the more evident it is that all this is here to stay for quite a while. Moreover, it is becoming as evident that relevant regulation needs adjustive amendment. Especially when it comes to rent. Government-imposed restrictions is severely impairing the intended use of rented space by many businesses operating on or from rented premises.

Sometimes absurd restrictions are generated by landlords. For example, shopping mall and supermarket bouncers may check shoppers' QR codes and deny entry to those who only head for legally QR-free groceries and pharmacies inside. True, these absurdities result from government's legal restrictions rather than the landlords' initiative, but let us remember that the risk of accidental consequences of impossible or impaired use of rented property for its intended purpose lies with the landlord.

Disputes over unilaterally altered terms of lease would therefore be — and are — predictable, no matter how both landlords and tenants loath them. When the pandemic was still at its beginning one year and a half ago, the acuteness of such issues was partially smoothed over by emergency legislation, particularly, article 19 of Federal Law No. 98-FZ of April 2020, as subsequently amended. Applied as governing a specific subject matter (lex specialis), article 19 overrode the general rules of the law governing relevant general matters, particularly, the termination of contracts and tenants' entitlement to lower rent rates for reasons beyond their control (articles 451 and 614(4) of the Russian Civil Code, respectively). As a result, a year was lost when these very amendments, applied to lease conditions affected by the anti-pandemic measures, could have generated sufficient case law.

The fact is that article 19 of Federal Law No. 98-FZ was originally conceived and adopted as a provisional measure which the lawmakers optimistically expected would exhaust itself before the end of the year, and set forth deadlines falling within the same 2020 (or, at the longest, the first three months of 2021). Almost two years further into the pandemic, these provisions cannot legally apply any more — whereas the situation around the change of contractual terms looks now again very much the same as in 2020.

As it is, two options seem now possible — either drop the already unusable "anti-pandemic" legislative props and finally begin resolve disputes under the general rules of civil law (with the predictable initial chaos and uncertainties which the Supreme Court might reduce by its Presidium's decreed opinion), or keep extending these props by amending article 19 to accommodate new restrictions.

That said, there is also a third option — pretend as if nothing is happening and everything is going on as before. For some reason, there is a strong suspicion that this option is the likeliest.

Contract Law, Real Estate, Real Estate Disputes

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