Modification made to the definition of “force majeure”
Rental lease payments are suspended for housing and businesses, in addition to those relating to collateral loan payments to pawnshops.
As a result of the COVID-19 Pandemic, the Congress of the State Baja California has modified the definition of “force majeure/fortuitous event” as it used as a legal ground for breach of any agreement, by issuing a reform of article 1986 of the Civil Code for the State of Baja California (“Civil Code”), by adding a second paragraph in the same article, that is as follows:
“Art. 1986. No one is bound to a fortuitous event……
A fortuitous event is caused by situations brought upon by catastrophes suffered due to any meteorological phenomenon or natural causes, plagues, or epidemics. In addition to pandemics declared officially, when such affect mobility and social coexistence, by recommendation or order issued by authorities. Unforeseen circumstances in this paragraph do not imply rescission, resolution, or nullification of obligations or accessories, but to adjust contract or obligation under the established terms of Article 20 of this Code, when bound parties establish impossibility or decreasing possibilities of fulfilling their obligations as a consequence of the contingency.”
Furthermore, the Congress of the State of Baja California considered it to be necessary to support housing and business lessees, in addition to collateral loan payments to pawnshops throughout the months of April and May of this year, payment suspensions will only apply under the following terms:
|Lease of houses with a maximum area of 120 square meters. During the aforementioned period eviction from the leased property will not be applicable in accordance with article 474 of the Proceedings Civil Code or the termination of the agreement in accordance with Article 2363 of the Civil Code.|
|Lessees of establishments dedicated to businesses that sell and provide goods and services. The aforementioned period will not be subject to eviction from the leased property in accordance with Article 474 of the Proceedings Civil Code or the termination of the agreement in accordance with Article 2363 of the Civil Code.|
|Any Collateral loan may not be adjudicated or auctioned due to late payments.|
It is important to note that the possibility of extending the established term of these measures is possible if such is considered necessary by the authorities. A legal review is recommended in order to (i) identify if the business is eligible for such grant, (ii) negotiate the agreement with the lessor/lessee in order that payments be deferred throughout the months of payments that will be suspended (delayed), establishing a timeframe within which such obligations must be fulfilled.
Should you have any questions or doubts regarding your particular case, please do not hesitate to contact our firm.