Rent reduction: is it possible to claim it?

by Vanessa Gagliano | Jun 3, 2021 | Blog

In the context of lease contracts, can the tenant who is in financial difficulties demand a reduction in the rent and, should the owner not want to grant it, take legal action?

Judgement no. 3114/2021 of 19/02/2021 issued by the Court of Rome has answered in the negative.

According to this judgment, although the parties to a contract are bound by the duty of fairness and good faith in the performance of the contract and by the duty of social solidarity deriving from art. 2 of the Italian Constitution, there is no obligation in our legal system to renegotiate contracts which have become unfavourable to one of the parties, even if as a result of exceptional and unforeseeable events. Similarly, it is not possible to envisage a power of the Court to modify contractual regulations freely agreed upon by the parties in the exercise of their contractual autonomy, beyond the cases expressly provided for by the law (see the power of the court to reduce manifestly excessive penalties recognised by Art. 1384 of the Civil Code or the power recognised to the court by Art. 1660 of the Civil Code in the matter of tenders to make the necessary variations to the project and the correlative variations in price in the event of failure to reach an agreement between the parties).

The same Supreme Court, indeed, commenting on Article 1374 of the Civil Code (according to which “a contract binds the parties not only to what is expressed therein but also to all the consequences arising therefrom according to law, or, failing that, according to custom or equity“) and the principles of good faith, fairness and social solidarity.

  • recognises that they impose on each party to a contract a duty to act in such a way as to preserve the interests of the other, but this must be done “within the limits of its own interest” or “to the extent that it can be done without any appreciable sacrifice to the same party;
  • states that these principles may be used to supplement any ambiguous contractual clauses or missing contractual texts, but cannot replace the will of the parties as crystallised in the contract;
  • when it has held certain conduct to be unlawful or abusive due to breach of the duties of fairness and good faith in contracts, for example in corporate matters (in the case of resolutions adopted to the detriment of one or more shareholders), banking matters (such as in the case of withdrawal from a credit facility, which is contractually permissible even in the absence of a just cause but implemented in a totally unforeseen and arbitrary manner and in the presence of commercial relations without any criticality) and abuse of right (when a right is exercised for purposes other than those permitted by the law), the same Supreme Court has only ordered to pay damages, not also the replacement of the negotiation rule with a judicial rule drawn up by the judge.

 

Applying the above principles, the Court of Rome ruled that a request for a reduction of the rent would constitute an excessive sacrifice for the owner which cannot be imposed unless he voluntarily consents to it.

This is without prejudice to the tenant’s right to terminate the agreement in advance if he demonstrates that there are serious grounds for doing so under Article 27 of Law 392/1978, a possibility recognised in commercial leases. More specifically, the tenant may withdraw from the contract at any time, giving six months’ notice, if there are serious grounds. Serious grounds are understood to be facts extraneous to the tenant’s will, which have occurred since the conclusion of the contract and which are such as to prevent its continuation, such as, by way of example but not limited to, the tenant’s financial crisis (Supreme Court 5803/2019). The grounds must be such as to make it more burdensome, for the tenant, to continue the contract objectively (it must not be a unilateral assessment by the tenant on the convenience of maintaining the relationship). Therefore, a reason of economic convenience, such as having found a property with a lower rent, does not constitute a serious ground.

 

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