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Sweden

Law and regulation of rental agreements in Sweden during Covid-19

Table of contents
  1. Is a lessee eligible for rent reduction due to a significant decline in footfall and consequently its turnover as a result of COVID-19?
  2. Is a lessee eligible to temporarily close its leased space - on its own initiative – and opt for rent reduction as a result of COVID-19?
  3. Is a lessee eligible for rent reduction in the event its leased space is closed following an order by the Government as a result of COVID-19?
  4. What kind of security is generally provided by a lessee in connection with a lease, a bank guarantee, a deposit or otherwise?
  5. Could a lessee consider other legal options, such as a lease termination, not paying rent at all or other options as a result of COVID-19?
Sweden
Updated on 31.03.2020.

1. Is a lessee eligible for rent reduction due to a significant decline in footfall and consequently its turnover as a result of COVID-19?

It is a debated question whether force majeure clauses in tenancy contracts are applicable or otherwise if the effects from the COVID-19 outbreak could constitute grounds for setting aside or adjusting contract terms in accordance with the Swedish Contracts Act.

2. Is a lessee eligible to temporarily close its leased space - on its own initiative – and opt for rent reduction as a result of COVID-19?

Generally, a lessee may temporarily close the leased space unless the lessee, according to the tenancy contract, has a duty to operate. However, in general a lessee is not entitled to a rent reduction if it is the lessee's own initiative to close the leased space.

3. Is a lessee eligible for rent reduction in the event its leased space is closed following an order by the Government as a result of COVID-19?

As a general principle, a lessee is entitled to a rent reduction if Government restrictions limit the lessee's usage of part of or the entire leased space. However, force majeure clauses that favour the lessor may affect the lessee's right to a rent reduction as a result of the COVID-19 outbreak and so each lease would need to be analysed.

4. What kind of security is generally provided by a lessee in connection with a lease, a bank guarantee, a deposit or otherwise?

Usually, the lessee provides the lessor with either a bank guarantee or a deposit, but it is quite common when it comes to larger companies that a guarantee is instead provided from their parent company.

No, in principle not, but the circumstances in a specific matter could constitute grounds for such legal actions. The situation needs to be assessed case-by-case.

Authors

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Per Dalemo
WISTRAND