OGH on Rent Cuts during Pandemics

Nov 17, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has clarified that government interventions affecting the general public do not justify rent reductions. The burden of proof for the lack of usability of the property, which would justify a reduction of the rent, lies with the tenant.

The defendant is the operator of a mini-golf course. During the COVID 19 pandemic, the defendant suffered a loss of turnover due to a reduction in the number of customers visiting the mini-golf course. As a result of this loss of turnover, the defendant was in arrears with rent payments and claimed a rent cut.

However, the property owner demanded payment of the remaining rent and sued.

The court of first instance upheld the claim and found the defendant guilty. She was ordered to pay the rent arrears. Only loss of turnover attributable to official measures in connection with the COVID 19 pandemic can be considered a specific consequence of an objective restriction of the contractually agreed use and justify rent cuts. The defendant's objection was not upheld by the court of appeal.

The OGH confirmed the decision of the court of first instance. Rent can be reduced in the case of entry bans and also in the case of access restrictions by limiting the number of customers or establishing a minimum distance between customers.

In this case, however, restricting the number of customers having access to the defendant’s premises had no effect. As the mini-golf course was very large, it was legal for a large number of customers to use it at the same time, even during the pandemic. The limited number of customers frequenting the golf course at the same time during the pandemic was higher than those who had used the golf course before the COVID-19 pandemic, even on busy days. Therefore, there was no loss of usability of the property as a direct result of the official measures.

The defendant argued that customers would not visit its mini-golf facility or would leave as quickly as possible and without their usual consumption because of the hygiene measures imposed by the authorities, in particular the mask requirement or the 3G controls. The entire general public, however, was affected by these pandemic restrictions. They are included in the entrepreneurial risk borne by the lessee and therefore do not justify reducing the rent.

5 Ob 88/23m (29 August 2023)