COVID-19 Related Information
Issues of Rent 3: request for decrease
Can a business operator request a lessor of a building to decrease the rent for a room in a building, if its office or store is obliged to close and suspend its business by such a policy of the lessor of the building as closing the entire building or reducing the available hours of the building to prevent the spread of COVID-19 infection?
By such a policy of the lessor of the building as closing the entire building or reducing the available hours of the building to prevent the spread of COVID-19 infection in response to the requests for suspension of business or shortening the operation hours from prefectures, if any lessees who lease a room in the building became unavailable for the leased room entirely or available only limited hours, the issue arises whether or not such the lessor's policy is breach of the lease contract as failure of provision of access to the rooms in the building.
If there is a special provision in the lease contract for the room as a part of the building that prescribes the obligation of the lessee to pay the full amount of the rent regardless of the restrictions on the use of the room by the lessor, then the lessee needs to comply with it. If there is no such special provisions, since the rent to be paid by the lessee is a consideration for allowing the lessee to use the room, the lessee can ask the lessor to decrease the rent amount depends on the period and/or the time when the lessor failed to provide the lessee with access to the rooms.
In this regard, the lessor may claim for the rent payment in full as the restrictions on the building usage was based on the requests for suspension of business or shortening the operation hours from prefectures to prevent the spread of COVID-19 infection. The declaration of a state of emergency for the Novel coronavirus outbreak and the requests for suspension of business and so on are pursuant to the Act on Special Measures against New Type of Influenza. However, the requests for suspension of business and so on pursuant to the Act on Special Measures are not enforceable without any penalties and it is not impossible for the lessor to keep leasing its buildings and providing the lessees with access to the buildings. Therefore, the failure to provide the lessees with access to the buildings will be considered as breach of the lease contract.
Furthermore, the lessee may able to claim against the lessor for compensation of lost profits that caused by drop in sales resulted from being unable to carry out the lessee's business operations by using the leased office or store in the building. Regarding this point, it is difficult to calculate and prove the sales amount that would have been achieved if the business activities at the store or the office in the building were performed normally; however, it could be also taken into consideration in the negotiations with the lessor regarding the decrease of the rent amount.