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COVID-19: Measures Related to Leases and Evictions
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Through Executive Decree No. 145 of 1 May 2020 (the “Executive Decree”), enacted in Official Gazette 29,015 of the same date, the Panamanian Government established certain measures related to lease agreements and eviction procedures. Among its recitals, the Executive Decree indicates “that the health crisis produced by the COVID-19 pandemic, has resulted in the loss of jobs, the suspension of the effects of contracts, as well as commercial and industrial activities, making timely rental payments under residential, commercial, professional, industrial and educational lease agreements impossible, and requires the intervention of the Executive Branch, to establish mechanisms that guarantee compliance with the rights and obligations of both parties to the relationship”. Among the effects of the Executive Decree are the following:
As a general observation, it must be noted that because the State is not a party to lease agreements governed by private law, it cannot modify – via decree – the terms and conditions agreed to by the parties in a private document. Only the parties to that contract can agree to such modifications. On the other hand, the Civil Code of the Republic of Panama is clear when it indicates that, in contractual matters, the laws in force at the time in which the parties entered into an agreement are understood to be incorporated into contracts. The application – via decree – of a new legal regime on leases subject to private law that are already underway is, at the very least, questionable. As a result of the gaps and ambiguities created regarding lease agreements in the wake of the issuing of the Executive Decree, especially seeing how this may have serious implications on contractual relationships between lessors and lessees, we hereby offer the following observations that should be considered by a lessor or lessee vis-à-vis the Executive Decree.
In case of any additional queries, please contact Ramón Varela ([email protected]) or Miguel Arias ([email protected]).
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