Up Again France: Premises and Workplace

Employment

1. What are the key things that employers have to consider in relation to social distancing in the workplace, e.g. open plan or spacing of desks, use of shared equipment, limited access to communal facilities, canteen / restaurant, etc.?

See the France FAQ on People for more details, but in summary:

  • The employer shall consider the maximum occupancy of open spaces in the workplace based on the estimated number of square metres per person, necessary to allow for people (for example, employees or customers) to attend simultaneously in the same space to move in a way that is respectful of the rules of physical distancing. These are a minimum of 4m² per person (1 metre around each person).
  • The employer must also implement circulation plans must be implemented to ensure compliance with the minimal physical distance, especially in elevators; parking lots; entry and exit of the premises; specific departments that will receive visits from employees (such as IT or HR) where appointments will be scheduled; common areas; and canteens.
  • The social distancing rules must always be complied with.

2. What key hygiene and/or infection prevention measures will employers have to take to ensure a safe workplace e.g. provision of adequate handwashing facilities, regular deep cleaning of offices, etc.?

If the premises have not been used in the last five days, the usual cleaning protocol will suffice, and no specific disinfection measures are necessary. It is only recommended to:

  • ventilate the premises well; and
  • let the water run to evacuate the volume that has stagnated in the internal pipes during the closure period.

If the premises have been frequented in the last five days, even partially, as a precaution a routine cleaning with a suitable product that will kill the virus must be carried out.

In addition, the company shall clean and disinfect surfaces and objects regularly touched several times a day using cleaning wipes or cleaning strips containing a surfactant. It must pay particular attention to plastic and steel surfaces, and to sanitary facilities, collective work equipment, stair railings, door handles, light switches, elevator knobs, touchscreens, telephone handsets, payment devices, reception desks, and furniture.

The company shall provide adequate handwashing facilities (i.e. a hydro-alcoholic solution), particularly near to office items such as printers, coffee machine, and microwaves.

Real Estate

3. Are there any specific obligations, liabilities or duties of conduct imposed on landlords, tenants or visitors with respect to the use or re-use and decontamination of premises; care, cleaning and maintenance of the exclusive and common areas; reporting requirements and/or measures in case of identified infections; health and safety issues - e.g. recommissioning water systems to avoid virus, installation of plexiglass screens, moving desks to comply with distancing. remodulation of fire prevention strategies (entrance/exit routes)? Is any distinction made between asset classes?

The French government has issued various health and safety measures to be taken by all persons to limit the spread of COVID-19 on returning to the workplace. These include respecting the social distancing measures, barrier gestures and wearing masks.

Regarding specific measures to be put in place within premises during the confinement and on deconfinement, the government has not issued any specific obligations on the landlord or tenant. Rather, it has issued a set of measures to be put in place by the employer, whether the employer is the landlord or the tenant. Please see the employment section above for more details on the measures employers must take.

Even if the landlord has delegated technical management to the tenant, it remains liable for major equipment and for lack of diligence. Should specific services be provided by the landlord (e.g. reception), the health and safety measures imposed by the COVID-19 containment rules must be observed by the landlord.

If the premises are leased on a multi-tenant basis, the landlord must ensure that the COVID-19 health and safety measures are adopted regarding the common areas of the building.

Crowd-control plans will be implemented to manage the flow of persons in and out of the building and to ensure compliance with the minimal physical distance, especially in elevators, parking lots, entry and exit of the premises, and common areas.

Landlords must collaborate with health authorities if they are contacted as part of the tracing process, and inform tenants if they become aware of any COVID-19 case in the premises. To facilitate the implementation of certain measures in the common areas of a building, it is possible for the landlord and/or property managers to publish or send the tenants a guide or manual relating to the good practices implemented in the context of the return to work in the context of COVID-19. Some landlords or property managers have done.

4. Are there any rent suspension measures and/or stay of recourses and actions (including eviction) or any Government support initiatives such as a furloughed building grant scheme (if so, maybe only a part of the building should be re-occupied)? When rent suspension measures are available, what is the usual payment mechanism and timing agreed to by the parties?

The government has taken various measures to help tenants with rent payments, and has extended deadlines that would have expired during the state of health emergency arising from COVID-19. 

With regards to rent payments:

  • The French government adopted Ordinance n° 2020-316 on 25 March 2020 relating to the payment of commercial rents and rental bills by very small businesses subject to the solidarity fund set up by the government (criteria detailed in decree n° 2020-371 of 30 March 2020). This Ordinance notably provides that these very small businesses may not incur any financial penalties, late payment interest or lossesdue to non-payment of professional or commercial rents or rental charges for whichpayment was due between 12 March 2020 and the date two months after the date of cessation of the state of health emergency in France. Moreover, any termination clause, penalty clause or any clause providing for forfeiture or activation of guarantees or sureties may not be enforced in relation to the non-payment of the abovementioned rents and rental charges.
  • As well as the official measures taken by the government, the main French lessors’ federations, and notably the National Council of Shopping Centers (Conseil National des Centres Commerciaux – CNCC) have called on their members to:
    • invoice rents on a monthly basis and temporarily suspend the collection of April 2020 rent;
    • spread rents over a period of two years for very small businesses; and
    • cancel three months' rent for very small businesses. This last proposal was reiterated in a press release published by the French Ministry of Economy and Finances.
  • With regards to other contractual obligations:
    • The French government also adopted Ordinance n° 2020-306 dated 25 March 2020, amended by Ordinance n° 2020-427 dated 15 April 2020 and Ordinance n° 2020-560 dated 13 May 2020, which notably provides that penalty payments, penalty clauses, termination clauses or clauses providing for forfeiture, when their purpose is to punish failure to perform an obligation within a given deadline, are deemed not to have started if such deadline expired between 12 March 2020 and 23 June 2020 (inclusive).
  • With regards to the stay/extension of deadlines:
    • The aforementioned Ordinance n° 2020-306 also provides for a stay or extension of the term or expiry of certain deadlines that should have expired between 12 March 2020 and 23 June 2020 (inclusive), as well as the extension of certain administrative or judicial measures (e.g. provisional measures, inquiry measures, certain authorisations or permits) should such measures terminate between 12 March 2020 and 23 June 2020 (inclusive).

With regards specifically to eviction, France’s winter ban on evictions (trève hivernale) has been extended until 10 July 2020; until such date, no evictions may be carried out.

5. Are there specific tax reliefs on payment or collection of rent instalments? Do they apply subject to actual payment or regardless? Do they apply generally or only to specific asset classes?

The Second Amended Finance Law for 2020 introduced a specific tax regime applicable to rental waivers.

Tax neutrality of waivers of rent debt granted by lessors between 15 April and 31 December 2020: waivers are deductible for lessors and carry-forward tax losses may be offset against waiver profit for the lessee under favourable conditions. This does not apply to transactions between related parties.

6. Are there any measures regarding relief from the performance of real estate-related contractual obligations?

As mentioned above, Ordinances n° 2020-306 and n° 2020-316 adopted by the French government alleviate the sanctions that may be applicable in case of non-performance of real estate-related contractual obligations (Cf. Q.4 Real Estate above for further details).

However, the main possibilities for full relief from the performance of an obligation in the current context are legal arguments, notably force majeure and possibly the notion of anticipatory breach (exception d’inexécution).

7. Are there any credit facilities in place to mitigate loss of income for landlords?

The French government adopted an Ordinance n° 2020-317 setting up a solidarity fund to help very small businesses that have been strongly affected by the pandemic or the lockdown measures by the French government. Decree n° 2020-371 adopted by the French government sets out a list of criteria for eligibility to this solidarity fund, which shall provide EUR1,500 to businesses who fall within its scope of application and who request it (a further amount between EUR2,000 and EUR5,000 may be obtained by businesses  that need it the most, subject to certain conditions). This measure could assist landlords that fall within its scope of application, which is however rather limited.

Aside from the assistance above, the best option for landlords highly affected by COVID-19 and the government measures taken in consequence is to discuss things with their banks. In an effort to assist, the French state announced a state guarantee of EUR300 billion for loans granted by banks to meet the cashflow needs of companies affected by the COVID-19 crisis. This means that companies can request a bank loan that will be backed by a state guarantee of 70%-90%, depending on the size of the company. A lot of treasury loans are therefore being granted to help landlords with their loss of income.

Moreover, Bpifrance has set up various measures to assist certain companies (very small businesses and small and medium companies) that have been affected by the COVID-19 pandemic. These include the granting of the Bpifrance guarantee for cash loans granted by French private banks, the extension of traditional guarantees for investment credits, and the restructuring on request of medium- and long-term credits for Bpifrance customers.

8. Is there any relief from loan repayments / enforcement of loans secured against properties?

Regarding the periodical repayment of a loan, Ordinance n° 2020-306 adopted by the French government on 25 March 2020 provides, as mentioned above, that any penalties, termination clauses, acceleration clauses that may apply in case of non-payment of the due amount shall be deemed inapplicable during the period from 12 March 2020 until 23 June 2020 (inclusive). However, this Ordinance does not apply to the enforcement of warranties.

So far, lenders and borrowers have for the most part found consensual solutions, for example agreement on a waiver, adaptation of the relevant periods and parameters, standstill agreements, or restructuring agreements. If no agreement is found, specific court measures under bankruptcy law may be contemplated by the borrower.

9. Are public services necessary to complete the sale, acquisition or other operation of real estate assets or companies or to establish the right to open for business (planning authorities, notary public, Land Registry, Companies’ Registry, etc.)?

Yes. Usually various actors intervene during real estate transactions, but various mechanisms have been put in place where applicable to continue these processes during the state of emergency.

There may be delays in obtaining information and documents from authorities in the course of due diligence, as authorities and courts are not fully staffed. This can also result in delays in the completion of the transaction.

10. Are there any specific processes or protocols available to consummate real estate operations enabling them to comply with any required social distancing (e.g. electronic signature, etc.)?

With regards to signing processes, remote signing or electronic signing processes are applied where possible, the validity of electronic signatures having recently been recognised and codified under article 1367 of the French Civil Code.

However, contracts regarding real estate rights (e.g. sale, promise to sell, mortgage) must take place before a notary. The parties or their authorized representatives must appear before the notary. French Notaries may proceed with the execution of notarial documents via a virtual meeting room – they may only use one specific secured video-conferencing platform (named LifeSize), but all notaries are not yet properly equipped in this respect.

The union real estate trade syndicates (UNIS) have published health and security recommendations for the resumption of business activities in the real estate sector, and recommend that various processes be adapted in the context of COVID-19 regarding real estate operations.

With regard to visits of premises that may be required, it is recommended where possible to carry out virtual visits. If actual visits are required, it is recommended to respect standard social-distancing measures and health and safety measures (e.g. frequent handwashing) and restrict the visits to a limited number of people.

11. Are contractors who were carrying out works within the premises obliged to resume them? Can building sites reopen when they were closed down? Are there any specific provisions in relation to certain asset classes authorising continuation / resumption of works (e.g. healthcare structures)?

The mandatory closing measures of certain commercial practices imposed by the French government did not apply to construction sites.

However, the French occupational safety administration for the construction and public works sector (Organisme Professionnel de Prévention du Bâtiment et des Travaux Publics – OPPBTP) published a good practice guide, validated by the French government, on 2 April 2020, which provides in particular for the implementation of all urgent and essential health measures linked to the prevention of the spread of COVID-19 on construction sites, the implementation of a quality information and communication system with personnel, and the appointment of a COVID-19 advisor who will coordinate the measures to be implemented.

12. Are there remedies or contractual arrangements available to address impossibility or delay for a party to handover premises to another which are/were to be constructed or refurbished, or for such other party to take over those premises?

As mentioned above Ordinance n° 2020-306 provides that penalty payments, penalty clauses, termination clauses or clauses providing for forfeiture, when their purpose is to punish failure to perform an obligation within a given deadline, are deemed not to have started if the deadline expired between 12 March 2020 and 23 June 2020 (inclusive).

As such, should delivery of premises be due between 12 March 2020 and 23 June 2020 (inclusive), any penalties that may be applicable for late delivery or lack of delivery shall not be applicable until after 23 June 2020.

Delivery after 23 June 2020 is also affected by the Ordinance. Indeed, should the deadline for delivery expire after 23 June 2020, the effective date of the penalties or other sanctions for late delivery or non-delivery shall be postponed by a period of time equal to the time elapsed between:

  • 12 March 2020 or the date on which the delivery obligation arose, whichever is later; and
  • 23 June 2020.

13. Has the duration of validity of administrative authorisations pertaining to development/construction of real estate assets (in particular planning authorisations) been extended?

The duration of validity of planning authorisations is suspended until 24 June 2020 if these deadlines did not expire before 12 March 2020.

If the Parliament approves the extension of the state of health emergency, the duration of validity of planning authorisations will be suspended until 24 August 2020.

Litigation and Regulation

14. Is the use of disclaimers for visitors or others coming on to the site of business useful for limiting potential future COVID-19 claims?

While such disclaimers could be useful, and may be taken into account by the judge in the event of litigation, they will not, in most cases, discharge the business from its liability (in particular, regarding physical injuries). The disclaimers should detail the risks incurred by the visitors or others.

If the visitors or others are asked to each sign a waiver, the document should specify the obligations of both the releasor and the releasee, and contain a recognition by the releasor that they have been sufficiently informed of the potential risks incurred.