In Portugal, the exceptional regime for situations of late payment of rents due under residential and non-residential lease agreements, under the covid-19 pandemic, regulated by Law 4-C/2020 of April 6, has already entered into force.
This exceptional regime has different rules for residential and non-residential lease agreements.
In the context of residential leases, there is an expected financial support when a fall in income of Tenants and landlords occurs.
The financial support resides in the granting of an interest-free loan to support the difference between the amount of the monthly income due and the amount resulting from the application to the household's income of a maximum effort rate of 35 %, in order to allow the payment of the income due. The remaining disposable income of the household may not be lower than the indexing of social support (€ 438.81).
Housing Tenants, as well as the guarantors of students who do not earn income from work, who are unable to pay the rent of the dwellings that constitute their permanent residence or, in the case of students, who constitute a residence by attendance of educational establishments located at a distance of more than 50 km from the permanent residence, can ask for this support if there was:
(i) a fall of more than 20 % of the income of the Tenant's household compared to the income of the previous month or the same period of the previous year and;
(ii) The rate of effort of the Tenant's household, calculated as a percentage of the income of all members of that household intended for the payment of rent, is or becomes more than 35 %.
This support may also be requested by landlords to offset the amount of the monthly rent, due and not paid, if the Tenants do not ask for this support and if they can demonstrate having:
(i) a fall of more than 20 % of the income of the landlord's household compared to the income of the previous month or the same period of the previous year, and;
(ii) This percentage of the income break is caused by the non-payment of rents by the Tenants under the provisions of this Law.
This regime does not apply to housing Tenants, whose income break determines the reduction in the value of rents owed by them, under the terms established in special rental or income regimes, such as supported rent and social income.
The exceptional regime for non-residential leases lies in the postponing of rent payments.
The payment of rents which expire from 1 April 2020 until the first month following the cessation of the state of emergency may be granted for the 12 months after the end of that period, in monthly instalments not less than one twelfth of the total amount, paid together with the rent of the month concerned.
This regime can be used by the Tenants who have:
(i) establishments open to the public for retail trade activities and the provision of closed services or which have their activities suspended by legislative or administrative determination, or other provisions for the implementation of the state of emergency, including the cases where they maintain the provision of e-commerce activities, or the provision of services at a distance or via electronic platform;
(ii) Restaurants and similar establishments, including cases where they operate for the sole purpose of confection intended for consumption outside the establishment or delivery at home.
The residential Tenants who find themselves in the contingency of not complying with the timely payment of income must communicate this fact to the Landlord, in accordance with the provisions of Article 6 of the Law, proving the breakdown of income.
With regard to non-residential leasing, there is no specific rule that provides for the communication of the granting of the payment of rents; however, considering the Tenant's obligations, namely the payment of the rent and the Landlord's legitimate expectations, for the Tenants to benefit from this regime, the provisions of article 6 of this regime will also apply.
The communications to the Landlord must be made in writing:
- Up to five days before the expiration of the first income in which they intend to benefit from non-payment or deferral of payment of the rent's regime.
- The income notice due on April 1, 2020 may be made until April 27, 2020.
It should also be noted that the late payment of rents that are due in the months in which the state of emergency is in force and in the first month thereafter, does not allow the Landlord to claim payment of compensation equal to 20% of what is due, provided for in Article 1041(1) of the Civil Code; does not allow the Landlord the right to refuse reception of the following rents and the lack of payment cannot be invoked as a basis for resolution, denunciation or other form of termination of the contract or imply to the Tenants any other penalty.
In the event of termination of the contract at the initiative of the Tenants, there is the immediate expiration of all rents due, so the Landlord may require, from the date of termination, the immediate payment of the overdue and unpaid rents.
In addition to the above, it should also be noted that during the duration of the measures of prevention, containment, mitigation and treatment of epidemiological infection of COVID-19 disease and up to 60 days after the cessation of such measures, the following occurrences are suspended in the context of residential and non-residential lease agreements:
- the production of effects of the complaints made by the Landlord;
- the expiry of the contracts, unless the Tenant doesn't object to termination;
- the effect of the revocation of the lordship's opposition to renewal;
- The deadline for restitution of the leased property if it has operated the expiry of the contract, unless the expiry operates by virtue of the end of the period stipulated or established by law;
- The foreclosure on property that is considered the permanent housing of the executed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.