This would likely be considered as entrepreneurial risk of the lessee, especially if the Government intervention involves suspension of the lessee’s specific activities. According to the existing precedents, a lessee will be eligible for rent reduction only when it is prevented from using the premises for reasons for which the lessor is liable. Final determination would be based on the specific circumstances – mainly: terms of the lease agreement and scope/specifics of the Government intervention. In certain instances, it may be argued that restrictions, which may be interpreted to address the specifics of the building where the leased premises are located, might entitle the lessee to claim non-payment of the rent for the duration of the restrictions. However, it is uncertain if such an argument would be successful.
Meanwhile, most shopping centres and lessees found an amicable solution to this situation. With a few exceptions, most of the malls in Sofia (Bulgaria’s capital) and elsewhere in the country provided rent holidays to the lessees for the period of the state of emergency announced by Bulgarian Parliament on 13 March 2020. In most cases, service charge continues to be due.
In the office leases segment, some lessors have also made rent concessions to their lessees.