OGH: COVID-19 and Reduced Rents

Apr 21, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has recently clarified that officially imposed access restrictions and distancing rules can justify reductions for rent paid for business premises.

The plaintiff is the landlord of a business premises, the defendants are his tenants and run a clothing shop there. For the months of March and April 2021, they only paid 80% and 50% of the prescribed rent respectively. During this period, distance and customer restrictions (1 customer per 20m2 or per 10m2) and the mandatory wearing of FFP2 masks were in force in Austria under the 4th COVID 19 Protective Measures Ordinance.

The defendants recorded a 50% drop in turnover in these two months compared to the average turnover from 2016 to 2019.

The plaintiff sought payment of the full rent. The defendants, however, argued that the distancing rules, the obligation to wear masks as well as a reduced propensity to buy on the part of customers due to the low vaccination coverage rate presented an extraordinary coincidence within the meaning of Section 1104 of the Austrian Civil Code (Allgemeines Bürgerliches Gesetzbuch, hereinafter ABGB).

The court of first instance ruled against the landlord, but the court of appeal overturned this decision and ordered a new decision after supplementing the proceedings.

The OGH confirmed the decision of the court of appeal, as follows:

If a property is partially unusable due to an elementary event mentioned in Section 1104 ABGB (which also includes epidemics), a proportionate part of the rent may be waived pursuant to Section 1105 ABGB.

However, a decrease in turnover as such is generally not sufficient to justify a reduced reduction.

In principle, access restrictions must be judged in the same way as complete shutdowns and are therefore to be considered ‘extraordinary coincidences’ within the meaning of Section 1104 ABGB in the context of a rent reduction pursuant to Section 1105 ABGB. However, other government interventions such as mask-wearing requirements and the resulting feelings of reluctance on the part of customers must be distinguished from this, as they are actually to be ascribed to the customers’ personal sphere, on which official measures only have an indirect influence. Such circumstances therefore do not justify rent reductions.

OGH 4 Ob 221/22m (28.02.2023)