As a follow-up to the “rent free period” issue, the Government of the Russian Federation has developed requirements for terms and conditions of deferred payment rent

09 April 2020
Julia Kuzmenko
Senior Associate

Now parties can add up the idea of how to exercise the right to defer debt repayment under lease agreement.

In the legal community, it is believed that the deferral applies only to those lease agreements under which the lessee, due to quarantine restrictions, was not deprived of the opportunity to use the leased property for the purposes specified in the lease agreement.

So, according to the Decree of the Government of the Russian Federation dd. 03.04.2020 № 439:

  1. Term/Object. The deferral is granted until October 1, 2020 from the date of the introduction of a high-alert or emergency situation in the subject of the Russian Federation in respect of non-residential premises of state, municipal and private property involved in the sectors of the economy most affected by the quarantine restrictions in connection with COVID-19;
  2. Amount. The deferral is provided for the amount of rent for the entire period of high-alert or emergency situation and 50% from the date of termination of this period until October 1, 2020;
  3. Terms of repayment. Rent arrears are subject to pay by the lessee not earlier than January 1, 2021 and not later than January 1, 2023;
  4. Sanctions. Penalties and interests for using somebody else’s money in connection with the deferral are not applied. Establishment of additional payments by the lessee is also not allowed in connection with the granting of a deferral;
  5. NB! for lessors. If deferral is granted, lessors are recommended to provide for a reduction of rent based on the actual exercise of real property activities by the lessee and considering non-working days stipulated by the presidential decree. Lessors who have granted a deferral must be provided with support measures related to the payment of corporate property tax, personal property tax, land tax, land rent for this real estate for the period of deferral.

It is important to note that parties retain the right to set other conditions for granting a deferral, if this does not lead to a deterioration of lessee position in comparison with the recommendations of the considered Decree of the Government.