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Rent exemptions and postponed payment of rent – implications on the lease guarantees

All areas of the society are affected by the ongoing situation with spread of the COVID-19 and the connected measures to limit the risk of infection. This applies not least to Norwegian businesses and lessors of real property. Lessors of commercial real property will have to assume that many of their lessees will suffer significant dips in turnover in their enterprises, and thus have difficulties paying their rent.

Lessors will likely experience substantial pressure in the form of requests from the lessees for rent exemptions or payment delays as contributions from the lessors to ensure that the lessee’s businesses does not go bankrupt or otherwise need to shut down as a direct consequence of the COVID-19-virus. It is precisely such cases of the lessee’s reduced ability to pay rent that the lease guarantees become particularly important. The debtor guarantees from the banks are generally based on various conditions and requirements that the lessor must be wary of when altering the obligations in the underlying lease agreement.  

Before the lessor decides to grant the lessee postponements in the payment of rent, or make other changes to the payment structure, the lessor should always check the bank guarantee to establish to what extent the terms of the lease can be altered without consent from the guarantor.  


Bank guarantees are generally connected to a specific lease agreement and the conditions and requirements therein at the time of establishing the guarantee. This implies that only the requirements and obligations in the lease agreement at the time of establishing the guarantee have been guaranteed by the bank, and the guarantor’s obligations may not be substantially altered without consent from the guarantor.  

If the parties to the lease agree that the lessee shall be granted exemptions, lower rent or other alterations to the obligations in the original lease, this is in reality an alteration of the terms of the lease agreement that the bank has guaranteed. These changes may require consent from the guarantor. 

The guarantee agreement is also normally entered into between the lessee and the guarantor, and the guarantor’s relation to the lessor, as the beneficiary under the guarantee, will generally not be affected by agreements between the lessee and the lessor. As a starting point, the guarantor will thus not be able to free itself from its obligations to the lessor by calling upon a change in the lease agreement. This is, however, only a starting point, and will not preclude that the contractual relationship between the lessee and the guarantor will have substantial consequences for the lessor.   

The guarantee-agreement expresses what obligations the bank has agreed to under the guarantee. If there are to be made alterations in the framework of the guarantee Norwegian contract law demands that both parties must agree. Alterations in the lease agreement, e.g. alterations in payment deadlines, adjustments in the size of the leased area, alterations in the lease period or other alterations, will influence the conditions for the bank’s guarantee setting, and thus construct a unilateral alteration of the banks obligations under the guarantee-agreement for which there is no basis. 

The guarantor may, however, not assert any such change in the lease agreement as basis for revision or termination of the guarantee obligation. Minor changes to the lease agreement that does not influence the bank’s position with regard to the guarantee, can normally be carried out without affecting the guarantee, and without participation from the guarantor. 

On the other hand, alterations that expand or change the guarantor’s obligations in a way that leaves the guarantor in a poorer or more vulnerable position, can generally not be carried out with effect for the guarantor without the guarantor’s consent. 

If measures agreed between the lessor and the lessee are of such a nature that it must be expected that the measures are of relevance for the guarantor, both the lessor and the lessee should consider whether it is necessary to involve the guarantor in connection to the alterations of the terms of the lease agreement.  


Lessors and lessees who consider entering into amendment agreements, should for example be aware of provisions that determine deadlines for reporting claims under the guarantee after maturity. An example of such a provision may be:

“In the course of the lease period, written notice of claims must med received by the Guarantor no later than six months after the maturity of the underlying payment obligation”.

Pursuant to such a provision, failure to report a payment breach to the guarantor within six months from the claim’s maturity will cut off the lessor’s ability to seek coverage under the guarantee. In the event of postponement of the payment obligation, the due date under the lease agreement will be postponed, but it is not given that such a postponement may be invoked against the guarantor. The guarantor’s contractual obligation to the lessee is, after all, based on the lease agreement (and the due date for payment of rent) which the bank was presented with at the time of the guarantee-agreement. Postponing the due date, or an alteration of the payment structure in the lease agreement, will often be a clear sign of a lessee’s poor financial state and may also influence the lessee’s future ability to pay rent, and thus the guarantors preconditions.  A guarantor who was aware of a lessee’s poor financial state, could have taken measures to limit its own risk.    

If the lessor was aware of this, and still failed to contribute to the guarantor being involved in the negotiations regarding alteration of the payment structure under the lease agreement, the guarantor could refuse to acknowledge the obligations under the guarantee to the lessor. 

If the amendment agreement cannot be invoked against the guarantor, a postponement of rent payment for three months will imply that the lessor now only has three months (and not six) to report a claim for coverage, under the example clause above. 

The lessors position will in such cases be even worse if the obligation to pay rent is postponed by six months. If so, the guarantee’s deadline for reporting claims after maturity will have expired, and the lessor will be left with a claim against the lessee. At this stage it is likely that the chances of getting coverage from the lessee are limited. 

A lessor who does not check the terms of the guarantee-agreement prior to granting postponements in the obligations to pay rent or rent exemptions, will therefore be at risk of either losing or reducing his claim against the guarantor if the ret payment postponement does not “save” the lessee’s business, and the lessee subsequently breaches its obligations.    


Many lessors may experience that lessees will have trouble paying their rent in the coming period. If lessors, in order to help the lessees in a troubled time, accepts reduction of rent or other changes of terms and conditions in the lease, this must be done with a conscious focus to the content, limitations and the conditions in the lessee’s guarantee. 

As the lessor’s assistance is predetermined by the lessee’s financial situation, the lessee’s guarantee may be an important last chance opportunity in situations where the alterations of the terms and conditions in the lease are not sufficient to help the lessee through the troubled time.  

As mentioned, changes in the contract do not automatically lead to corresponding changes in the guarantee. Changes of the guarantee requires the consent of the guarantor. If the lessor and lessee jointly make changes to the lease, which cannot be characterised as minor changes, the guarantor must be contacted and informed of the specific changes. The consequence of failing to make such a notification may be that the guarantor’s agreement with the lessee lapses, the lessee enters into bankruptcy and the parties “rescue operation” becomes futile.

COVID-19 leads to significant challenges regarding operation and turnover in the industry and commercial life.  Flexible and temporary adjustments of terms and conditions in the lease may help the industry and commercial life to survive the ongoing pandemic. However, it is important to ensure that the guarantor is involved in relation to implementations of flexible and temporary changes of terms and conditions in the lease, so that the rescue operation will have its intended effect.