Is there a legal basis for rent reduction during the epidemic?

There is a legal basis for rent reduction during the epidemic. China's civil law and contract law clearly stipulate force majeure and fair liability, so they are civil laws with legal basis. The unforeseeable and unavoidable objective conditions stipulated in the General Conditions 180 belong to force majeure and can be exempted from some contractual responsibilities.

1. Is there a legal basis for rent reduction during the epidemic?

There is a legal basis for rent reduction during the epidemic. According to Article 180 of the Civil Law (implemented from 202 1 1), force majeure refers to "unforeseeable, unavoidable and insurmountable objective circumstances".

Article 590 of the Civil Code stipulates that "if the contract cannot be performed due to force majeure, the liability shall be exempted in part or in whole according to the influence of force majeure, except as otherwise provided by law." Therefore, if force majeure occurs, the other party to the contract may request to terminate the contract, postpone the performance or partially perform the contract.

According to general knowledge, force majeure mainly includes three types: (1) natural disasters, such as earthquakes, tsunamis, typhoons, floods and mudslides; (2) Social abnormal events; (3) Government acts, such as expropriation, requisition, control and embargo. If the large-scale outbreak of COVID-19 epidemic causes the lessee to ask for rent reduction, we should judge whether it meets the three characteristics of "unforeseeable, inevitable and insurmountable" force majeure according to the situation, and we cannot generalize it.

A change of circumstances refers to a major change in the objective situation after the establishment of the contract, which the parties could not foresee when concluding the contract, and does not belong to the commercial risk caused by force majeure. If the continued performance of the contract is harmful to one party, obviously unfair, or the purpose of the contract cannot be achieved, the people's court shall decide whether to modify or terminate the contract according to the principle of fairness and the actual situation of the case. Therefore, in the case of force majeure, if the objective situation affects the principle of fairness, both parties to the contract can also request to modify or terminate the contract, which is mainly judged according to the principle of fairness.

2. What kind of tenants can be rent-free?

First, if the government and relevant departments take administrative measures to stop business, the principle of force majeure shall apply to the lease contract, and the rent shall be reduced or exempted. Under the impact of the epidemic, the government and relevant departments have taken many administrative measures to prevent and control the epidemic, such as closing scenic spots, cinemas, entertainment places and Internet cafes. Even government departments in some areas shut down the catering service industry. In this case, it is obviously unforeseeable, inevitable and insurmountable for the lessee to be unable to use the leased property. If the epidemic situation is affected by force majeure, the rent shall be reduced or exempted.

Second, if it is not forced to shut down, but is greatly affected, the principle of force majeure does not apply to the lease contract, and the principle of fairness can be applied to reduce the rent as appropriate. Hu Jun believes that although some industries are not forced to shut down, they are greatly affected by the epidemic, such as catering service units (not shut down), factories, shopping malls and hotels. The leased property can still be used, but it cannot fully achieve the expected purpose of the contract. Performing the lease contract according to the original contract has a great influence on the rights and interests of the lessee. In this case, force majeure is not applicable to the epidemic situation, but the principle of fairness can be applied to request rent reduction as appropriate, and the lessor and lessee will share the losses and tide over the difficulties together.

Third, renting houses, supermarkets, etc. Most of them are not affected by the epidemic or have little impact. Hu Jun believes that force majeure does not apply to these tenants, and the lessor has no legal obligation to reduce or exempt the rent. However, the lessee and lessor can solve the problem through friendly negotiation, and reasonably reduce and share the losses.

During the epidemic, in fact, many people did not actually use the leased premises, and some small and medium-sized enterprises could not operate normally at all, so naturally they did not use the factory buildings. Therefore, whether the rent should be paid at this time should be based on local policies and the provisions made in the contract law, and there is a legal basis to reduce it.