Ground-Breaking Ruling In Malaga For Business Struggling To Pay Rent

GROUND-BREAKING ruling in Malaga as judge applies the ‘rebus’ clause to a business struggling to pay rent
A Malaga court has made the pioneering decision to apply a little-known legal procedure to a business whose landlord refused to reduce the rent even though the owner of the company could prove that they had suffered severe financial loss as a result of Covid restrictions and could not possibly pay the amount owed. ‘Rebus sic stantibus’ states that legal contracts can be renegotiated or even terminated if there is a dramatic unexpected change in circumstances, such as the global coronavirus pandemic.
According to the law firm representing the business in question, Larios Tres Legal SLP, implementing the ‘rebus’ clause is a grounding-breaking resolution not only at the provincial level, but in all of Andalusia. According to one of the lawyers, Fernando Aguilar, the SME rents the premises of his retail business from the owner of a large shopping centre, but the landlord refused to renegotiate the rental price despite a sharp drop in sales. Since there was no available solution, the business owner filed a lawsuit under the ‘rebus’ clause.
On February 16, the court agreed to establish as a precautionary measure the provisional suspension of the landlord’s power to enforce the terms of the rental contract. The business owner will also be protected from being listed as a defaulter, which could affect him in the future.
Mr Aguilar cautioned that the court’s decision was only a precautionary one and there is no guarantee that he will eventually order the landlord to lower or suspend the rent.
“It is important to be prudent and not rush to sue at will, and each specific case must be thoroughly analysed,” the lawyer said. “It is essential that there is a serious disproportion between the amount of rents charged by the landlord and the losses incurred by the business.”
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