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COVID-19 Update: Russia Announces New Measure To Support Tenants (Federal law No. 166-FZ dated June 8, 2020)

by | Jun 9, 2020 | Blog | 0 comments

It is expected that as a result of Russia’s many Covid-19 related restrictions on travel and economic activity, many commercial tenants will be unable to use leased properties to generate income to pay rent, while many landlords will continue to be obligated to make mortgage payments on the property.  As a result, it is likely that many disputes between landlords and tenants will arise centered on the terms and conditions of their commercial property leases.

The new Federal law No 166-FZ enacted on June 8, 2020 is designed to protect the interests of certain commercial tenants.

According to the amendments, small and medium size businesses most affected by the pandemic renting certain types of commercial properties, will be entitled to request that the landlords reduce rent rates for the term of up to one year.  The industries considered most affected by the pandemic include air carriage, airports, automobile carriage; tourism; culture, entertainment; health, fitness and sports; hotel business etc.

If the landlord and tenant are unable to reach an agreement within 14 business days after a request to reduce rent, the tenant may unilaterally terminate the lease in accordance with Civil Code, Article 450.1, and be released from liability to pay damages and penalties related to early termination of the lease. At the same time, the landlord will be entitled to retain any security deposit on hand. If you would like more information about how your commercial lease may be affected by these amendments, please contact Grigory Galkin at ggalkin@mslegal.com or Sergey Sokolov at ssokolov@mslegal.com.