The pandemic caused by the coronavirus and the restrictions on business life decreed by the authorities to combat it raise certain legal questions. For example, the 96th Regulation of the Ministry of Social Affairs, Health, Care and Consumer Protection requires the closure of shops in sectors that do not serve to maintain the supply of medical goods, medicines, and food to the public.

The state of emergency caused by the pandemic and the official response to it, aims to significantly restrict social contacts and serves to isolate people belonging to risk groups as much as possible.

The state of emergency is a burden on companies, especially in the retail, tourism, and hospitality sectors. For these enterprises, it is currently relevant, among other things, whether they are obliged to pay rent for business premises, offices, etc. for the duration of the state of emergency.

The relevant legal provision for assessing this question is § 1104 of the Austrian Civil Code („ABGB“):

If, due to extraordinary circumstances, such as fire, war or plague, major floods, sudden changes in the weather, or complete lack of growth, the property cannot be used at all, the owner of the property is not obligated to return the property, but no rent is due.

Paragraph 1104 of the Austrian Civil Code (ABGB) mentions demonstrative facts which are intended to define the term „extraordinary circumstance“. These circumstances release tenants, for the duration of their being affected by such circumstances, from the obligation to pay interest on rented property which is not used or cannot be used. This obligation may be wholly or partially waived, depending on the actual restriction of use caused by the extraordinary coincidence. The release of the tenant from the obligation to pay rent correlates to the release of the landlord’s obligation to maintain the rented object.

Is the official restriction on the use of shops, restaurants, and other business premises currently in force in the wake of the coronavirus pandemic to be regarded as an „extraordinary circumstance“ according to the definition of § 1104 ABGB (Austrian Civil Code)?

The judicature of the Supreme Court answers this question in the affirmative. In consistent case law, the Supreme Court assumes that „elementary events which cannot be controlled by humans and for the consequences of which, in general, no one can demand compensation“ (Supreme Court, 1 Ob 306/02k) are „extraordinary circumstances“ within the meaning of § 1104 ABGB. The restrictions on the use of existing properties caused by the current pandemic and the official reaction to it fulfil the facts of the case as standardised in § 1104 ABGB.

However, this does not always mean that there is a temporary exemption from the obligation to pay rent.

On the one hand, § 1104 ABGB is a non-mandatory law. Different agreements may therefore be made in rental contracts. On the other hand, exemption from the obligation to pay rent is only granted for the part of the property that is actually not usable (§ 1105 ABGB). If, for example, part of a business premises is used as a warehouse, the payment obligation for this part may still exist.

The partial reduction of interest for leases is to be assessed differently. A partial reduction of the rent is only possible if the lease was concluded for a maximum of one year and more than half of the normal lease income is lost due to the unusability.

In addition to the possibility of a rent reduction, affected entrepreneurs also have the option of prematurely terminating the lease for good cause (unusability).

Therefore, it is not possible to derive a general loss of rent for affected businesses from § 1104 ABGB. However, it does provide a set of instruments that makes the goal of reducing the rent attainable under the conditions described here.

In any case, those affected should be advised to reach an agreement with the landlords immediately in order to formulate amicable solutions.

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Our series of articles on legal questions concerning corona virus are meant to provide general information to pressing legal concerns and should in no way be construed as legal advice for a particular case. For legal advice tailored to the concerns of you or your business, please contact us at: . We’re here to help.

See all our Corona-Virus Articles here:

1. Miete (Deutsch)
2. Rent (English)
3. Doppelbesteuerungsabkommen zwischen Österreich und der Russischen Föderation (Deutsch)
4. Double Taxation Treaty between Austria and the Russian Federation – (English)
5. Fristenmoratorium (Deutsch)
6. Moratorium on Legal Deadlines (English)
7. Erleichterungen für Mieter von Wohnungen (Deutsch)
8. Temporary Relief Measures of Tenants (English)