According to the Regulation of the Ukrainian Government №211 as of March 11, 2020 “On preventing the spread of acute respiratory disease COVID-19 in Ukraine” and the Law №3219 as of March 17, 2020, a quarantine has been recognized among others as a force majeure in Ukraine.
According to the Civil Code of Ukraine, the tenant (lessee) has a right to rent fee reduction if due to circumstances beyond their control, the ability to use the property has decreased significantly.
Also the tenant (lessee) is released from rent fee payment for any time during which the property cannot be used for its intended purpose.
How can it actually be applied?
The main points are the following:
- the quarantine introduction itself does not affect the tenant's ability to pay the rent, and therefore cannot be considered a force majeure for this obligation automatically;
- to implement the above-mentioned options it’s necessary to have additional proof of property using impossibility;
- according to law, lack of money is not considered a force majeure, so the inability to pay cannot be attributed to force majeure. In such a case it’s necessary to prove causation;
- inability to use the premises due to the introduction of prohibition on a certain type of activity (it’s the absolute basis as of now for shopping centers, entertainment centers, hairdressers, coworking spaces etc.);
- most of the rent contracts foresee the termination ahead of schedule due to force majeure and can be used by one of the contractual parties according to agreed terms;
- in any case it’s necessary to apply to the Chamber of Commerce (www.ucci.org.ua) or the regional ones for a Certificate of force majeure.
Moreover, due to the recent changes to the Tax Code of Ukraine, non-residential real estate is not subject to real estate tax other than land from March 1 till April 30, 2020. Anyway it can be subject for further negotiations between the contractual parties.