The weeks to come Real estate - KPMG Law

The weeks to come
Real estate

 Due to the tense liquidity situation, the contractual relations between
 tenants/lessees and landlords/lessors are now confronted with new
 framework conditions which must be mastered. Building principals
 can also secure the realisation of their construction projects in the
 current crisis.

 1. Tenancy and leasehold relationships during the COVID-19 pandemic
 The Act to Relieve the Consequences of the COVID-19 Pandemic entered into force on 1
 April 2020. As regards tenancy and leasehold relationships, it does not regulate a right to
 refuse performance in the sense of a moratorium as desired by many tenants and lessees,
 but merely provides for a temporary ban on termination of contracts in relation to tenants and
 lessees who are currently unable to fulfil their payment obligations as a result of the effects of
 the COVID-19 pandemic in the period between 1 April 2020 to 30 June 2020. According to the
 statute, tenants and lessees must provide prima facie evidence that their failure to pay is
 based on the COVID-19 pandemic. The arrears of rent and leasehold rents arising in this way
 must be paid subsequently by 30 June 2022, otherwise the new statutory protection no longer
 applies.

 Unfortunately, it is currently not possible to predict when many enterprises in Germany
 affected by the crisis will be able to resume their business activities. It remains to be hoped
 that the initial state aid is sufficient to adequately protect the liquidity of landlords and lessors
 in the COVID-19 pandemic once rents and leasehold payments are only received in reduced

form from 1 April 2020 onwards. We would like to support you as tenants and lessees, but
also as landlords and lessors, in this crisis as a reliable partner in the best possible way. For
this reason, we have developed a special range of services which we will continue to develop
further and adapt at short notice in each case to meet the current situation:

  Support in lease contract negotiations and in the production of subsequent alterations to
  lease contracts in order to implement or supplement the regulations of the COVID-19 Act
  for tenancy and leasehold relationships, in particular through regulations on deferred
  payment.
  Advice and support for the lessee and the lessor:
  in applying for state support payments with regard to the lease obligations;
  in the legal provision of prima facie evidence that failure to pay is based on the COVID-19
  pandemic;
  in the assertion of a rent reduction as a result of state orders against the lessee and for the
  adaptation of the contract;
  in warding off unjustified payment cessations or reductions;
  regarding the statutory exclusion of lease termination, the consequences of delay, recourse
  to rent deposits and the securing of claims through the interruption of the period of
  prescription.
  Advice on further-reaching measures for contract drafting to avoid a domino effect which
  could result from payment backlogs and the insolvency of tenants in relation to existing real
  estate financing.

We have a team of more than 20 lawyers specialising in construction and commercial real
estate law in all investment centres in Germany and are happy to offer you our wholehearted
support in these extremely challenging times as one of the largest lawyers’ practices in this
sphere.

Contact: Rainer Algermissen und Petra Swai

2. Building projects in the corona crisis: challenges for building principals
The COVID-19 pandemic can seriously affect building projects and confronts the construction
industry with numerous challenges.

In the current situation, it is important for building principals to ensure the realisation
of the building project by

  securing the liquidity of the construction enterprise;
  swift verification of payment claims and offers;
  investigation of public authority orders.

Public principals can ensure the liquidity of the construction enterprises by suitable
measures, for example through secured advance payments, swift verification of invoices
and offers. At the same time, further-reaching public authority orders must be investigated

and if necessary, set aside in a consultation procedure.

 We help principals:

   as an extended workbench in verifying payment claims, possibly through the use of
   automated mass procedures;
   with a legal examination of public authority orders which disrupt the operation of the
   building site;
   and with the creation of legal certainty, amongst other things with measures to ensure
   liquidity to help enterprises with appropriate contract drafting.

 Due to the shutdown of construction sites, the COVID-19 crisis is leading to drastic
 reductions in turnover but with continuing fixed overhead costs, presenting risks to
 ensuring the enterprises’ capacity to pay. We advise on the pragmatic and legally certain
 application of contractual drafting possibilities. With our swift verification of offers and
 invoices, we help all parties to gain greater planning certainty.

 We are still there for you after the crisis:

   as legal advisors to support your contract management;
   as representatives in legal proceedings when it comes to enforcing claims in court;
   as advisors in order to implement the necessary change processes internally and develop
   them for the next construction projects.

 We support you in the long term inevaluating the claims of the enterprises instructed,
 warding off and implementing claims. We are at your side when learning the lessons from
 the crisis and fixing the risk parameters for future building projectswith you.

 Support-Hotline: +49 30 530199-288
 E-Mail Support: de-covid-19@kpmg-law.com

Contact:
KPMG Law

Dr. Rainer Algermissen                                              Dr. Torsten Göhlert
Partner Leiter Construction and Real Estate Law                     Senior Manager

    +49 40 3609945331                                                   +49 351 21294423

     Contact                                                             Contact

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