Rent discount during the pandemic, what to do? The coronavirus generated the decree of a state of public calamity in the national territory by means of Legislative Decree nº 06 of 03/20/2020 and had great impacts on real estate relations.
The loss of income due to the social isolation necessary to prevent the spread of the coronavirus brought with it a major economic crisis. Many people who live on rent and have lost their jobs or have had their income reduced have asked the property owners to negotiate the amount charged for rent. This, by the way, is recommended by experts and financial planners to avoid fines and uncontrolled debts.
After all, the bills keep coming and the expense of renting the property where you live is usually the highest fixed expense. But, how to proceed in this delicate moment?
According to a study by the Association of Real Estate and Condominium Management of São Paulo (AABIC), 20% of residential property rental contracts had to be negotiated in recent months in the State of São Paulo. In most cases, there was a temporary reduction in the amount. Discounts ranged between 10% and 50%.
According to the president of the association, José Roberto Graiche Júnior, on average, before the crisis, arrears on rent payments accounted for 1.8% of total rental contracts and were, according to him, at 2.8% in recent years. Two months. This is due to the large negotiation of values that has been taking place.
Considering the landlord’s difficulty in paying the rent due to unemployment or reduced income, the idea is that the lease of the residential property be made more flexible, if the tenant proves that he cannot honor his commitment due to the consequences of the pandemic.
What does the law say about the rental discount during the pandemic?
There are legal arguments, consolidated in the Civil Code, which mention that situations not foreseen in the signing of a contract (such as a worldwide pandemic), make it fair that they be changed, aiming to regain the balance between the parties and excessive burdens.
The lawyer Amanda Lobão stresses that it is important to know that there are already arguments in the law that deal with this matter, and any new legislation is unnecessary, they are:
- The tenancy law provides that the parties fix, by mutual agreement, a new rent amount and also insert or modify readjustment clauses (art. 18, Tenancy Law );
- The law also provides for the possibility of adjusting the rental price to the real moment in the face of changes in purchasing power, and the judge may correct this imbalance as he considers reasonable and proportional to the parties (art. 317, CC.);
- If the price paid for rent becomes excessively burdensome, with an extreme advantage for the lessor, the tenant may request the contract to be canceled due to extraordinary and unpredictable events, such as the pandemic and its isolation (art. 478, CC.) ;
- The debtor is only liable for losses resulting from situations called by law as “fortuitous event or force majeure” (facts whose effects could not be prevented or prevented, as the pandemic can be framed), if the debtor has expressly taken responsibility for the losses arising in such cases. In other words, the lessee, being unable to avoid or prevent the effects and losses arising from the pandemic, has his responsibility excluded, since when the pandemic is classified as a fortuitous event or force majeure, this is what we legally call “exclusion of responsibility”. (art. 393, CC.) Here it is important to note that the debtor who is already unpaid with his payment before the quarantine decree is not covered because his liability is excluded.
How to renegotiate rent during the pandemic?
The landlord (those who live on rent) whose profits have been reduced due to the COVID crisis, needs to contact the property owner to ask for a review of the amount charged. The tenant is not required by law to grant discounts, but it is certain that the moment of crisis requires understanding and solidarity from all.
The landlord can point out that he wants to pay the rent, but with a discount proportional to the drop in revenue, for example. However, if logical arguments do not sensitize the lessor, the lessee can appeal the litigious path, and then notify him in court that he wants to renegotiate the contract values. It is up to the Judiciary to intervene in these private relations to balance the losses in view of the evidence that one of the parties took on all the financial burden resulting from this force majeure scenario.
What to do in the face of these considerations?
It is advisable that upon proof of a reduction in the renter’s earnings, the owner of the property, within what is possible, grant the rent discount during the pandemic. However, it is essential that the tenant also understands the property owner’s side, after all, the landlord often has this as his only source of income. A survey by Secovi shows that 70% of the owners have only one or two properties.
Possibilities for rent discount negotiations during the pandemic:
- Temporary concession of discount in the rent, compatible with the reduction of the billing or rent. On average, the terms of the deal last 2.7 months. After this period, the tendency is to return to the normal price or to negotiate the value again.
- Full suspension of payments with extension for a later period;
- Percentage payment at this time with extension and installment of the remainder for a later period;
- Do not readjust the rental price this year 2020.
What if no agreement is reached? Seek legal assistance to file a lawsuit. The judge will evaluate the case and will be able to determine the payment of a portion of the rental amount that benefits both parties.
Termination of rental agreement
As a result of the large number of contracts that have been readjusted, many are no longer able to pay what was provided for in the contract and need to hand over the keys in advance. This is better than staying with the tenant without paying and having to ask for the eviction of the property. Once again, understanding of both sides is necessary here.
The most common rental agreement model lasts for 30 months. Normally, in the contract, a fine is foreseen if the delivery of the property key occurs before the scheduled deadline. However, according to the Civil Code, it is understood that it is possible to not pay this fine because the pandemic is an extraordinary event. This is because the cancellation of the contract was not the fault of the lessee.
Art. 478 of the Civil Code: In the contracts of continuous or deferred execution, if the performance of one of the parties becomes excessively burdensome, with extreme advantage for the other, due to extraordinary and unpredictable events, the debtor may request the termination of the contract.
In the case of students who rented the property to study in other cities, but had to return home, since classes are taking place online and, even without an effective return forecast, the above article is also valid.
We always advise a negotiation between the parties, taking into account the unique moment in which we are living and prevailing common sense. If your tenant is leaving the property, at Zimobi you can advertise your rental for free and you can even, with a click, spread your ad on the main portals. Generating much more interested.