Exceptional Leasing Law: Considerations to be taken into account.

Marcelo Longaric – Associate

By means of Law No. 1342 dated August 27, 2020, the Government issued the Exceptional Leasing Law, popularly known as the Rent Law.

Said Law was issued with the intention of trying -in some way- to reduce the negative economic impact that could be caused by the declaration of National Sanitary Emergency decreed by the National Government through Supreme Decree No. 4196 dated March 17, 2020 at the beginning of the COVID – 19 pandemic, which derived in the application of a Rigid and Strict Quarantine, implying the suspension of most of the economic activities for approximately four months.

Through this regulation, measures are implemented both in favor of the renter and the owner, with the purpose of trying to somehow “balance” the economic situation. These measures involve:

  • A 50% reduction in the rental fee for those renters who had not reached a discount agreement with the owner of the property before the promulgation of the mentioned Law.
  • The monthly rental fee did not exceed Bs. 5,000 for real estate used for housing, Bs. 7,000  for real estate used for commerce and Bs. 15,000 for real estate used for industrial activities.
  • Regarding favorable measures for the owner, these included: (i) remission of the monthly payment of RC VAT and (ii) tax benefits to be granted by the autonomous municipal governments.
  • The prohibition of evictions during the quarantine and up to three months after the quarantine has been ended, a situation that is consistent with the terms of Article 8 of the mentioned law, which establishes the suspension of evictions through judicial intervention, as long as these have been promoted by the non-payment of lease payments.

It is important to consider that people who receive a monthly salary from the public sector are excluded from the benefits established in this law.

On January 13, 2021, Supreme Decree No. 4450 was issued which regulates  articles 3 and 5 of the Exceptional Leasing Law. The aforementioned articles refer to the measures that favor, both the owner and the tenant, especially the remission of 50% of the payment of the RC – VAT by the owner, when he reaches a reduction agreement of at least 50 % with the tenant, either through the signing of a new contract or through a conciliation.

In this sense, it is important that the parties that had signed a leasing contract prior to the declaration of National Health Emergency for COVID-19 and to date have not reached an agreement on the reduction of the leasing fee, can negotiate the signing a new contract that allows them to benefit from the benefits granted by Law No. 1342.

In order to protect your interests, contractual relations and especially your assets, IA has the necessary experience to support you in your negotiations, review of signed and to be signed contracts and therefore, you can count with all the legal certainty of the case.