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Budget Changes and Lease Relations During Quarantine
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Budget Changes and Lease Relations During Quarantine: Analysis of Law №553-IX
The adoption of legislative changes during a crisis always sparks lively discussions within the business community. One of the most anticipated documents was Bill №3279-d, which was intended to regulate rent issues under force majeure conditions. However, the final version of the law adjusted the expectations of entrepreneurs.
Contents:
Expectations for Bill №3279-d: Rent Ceiling
Bill №3279-d dated 11.04.2020 on amendments to Law №553-IX aimed to set a clear limit for property owners. It was envisaged that the payment for using property could not exceed the total volume of expenses incurred by the lessor.
These expenses included:
- Land payment (tax or lease);
- Real estate tax;
- Utility services proportional to the leased area.
Even the Chamber of Commerce and Industry (CCI) provided recommendations on applying this specific norm for calculations during the March-April period to balance the interests of both parties to the contract.
Realities of Law №553-IX: When is the Tenant Truly Exempt from Payment?
After the publication of the text of Law №553-IX dated 17.04.2020 in the “Holos Ukrainy” newspaper, the situation turned out to be somewhat different. The legislator established that during the period of quarantine restrictions imposed by the Cabinet of Ministers, the tenant could expect exemption from payment according to Part 6 of Article 762 of the Civil Code of Ukraine.
However, this right is not unconditional. Exemption is possible only in two cases:
- Presence of a direct Government ban on the tenant’s specific type of activity.
- Ban on clients visiting the leased premises.
Thus, if your activity is not officially banned but is effectively stopped due to lack of demand, obtaining an automatic exemption will be extremely difficult.
Constitutional Aspects and the Retroactive Effect of the Law
A significant stumbling block is Article 58 of the Constitution of Ukraine. According to it, laws do not have retroactive effect unless they mitigate or cancel the liability of a person.
This creates serious legal challenges:
- The provisions of Law №553-IX are difficult to apply to disputes that arose before it entered into force.
- The law again does not contain direct prohibitions and restrictions for the lessor regarding the independent establishment of the rent amount in contracts.
Such uncertainty forces businesses to seek compromises through mediation or in court, relying on a complex system of proving the impossibility of using the property.
Practical Recommendations and Useful Links
For a more detailed study of the issue, we recommend reviewing official sources and materials from our experts:
- Legal Support: Comprehensive Business Support.
- Official Data: Bill №3279-d card on the VRU portal.
- Text of the Law: Law of Ukraine № 553-IX on zakon.rada.gov.ua.
Do you have questions about legislative changes? Attorneys at Law Business Association will help your business adapt to new economic realities and protect your interests in lease disputes.
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