1.Introduction

A lessor’s right to terminate a lease with no notice period is defined under Section 2291 of Act No. 89/2012 Coll., the Civil Code (“CC”), according to which a lessor is entitled to terminate a lease in this manner if a tenant commits a gross breach of a contractual obligation. Such breaches particularly include failure to pay rent and the costs of services for at least three months, damaging an apartment or building in a serious and irreparable manner, etc.

However, a breach of the tenant’s obligations alone does not constitute sufficient grounds for the termination of a lease; before terminating the lease the lessor must first request that the tenant rectify the situation and grant a reasonable amount of time to comply. Only then, on condition that the tenant fails to comply with his or her obligations or rectify the situation, is the lessor entitled to terminate the lease with no notice period.

The termination notice must then state the reason for the termination, i.e. what the lessor considers to be a gross beach of the tenant’s obligations.

If the termination notice does not state the reason, or if the lessor does not request that the tenant rectify the situation, the termination notice is not taken into account, i.e. it is considered that no termination notice was issued and the lease continues.

According to the provisions of Section 2290 CC the tenant then has the right to file a proposal that the court review whether or not the termination notice is justified, within two months of receiving the termination notice.

Owing to the above, courts often deal with cases involving the legitimacy or validity of such a notice, while this matter has a fundamental impact both on tenants and on lessors. Using the correct procedure and formulation of a termination notice can therefore save a considerable amount of time, as well as funds that would otherwise be spent on a potential judicial dispute.

The Supreme Court resolved such a judicial dispute in its judgement of 18 January 2017, Ref. No. 26 Cdo 4249/2016.

2. Facts of the case

In the case heard by the Supreme Court the lessor found that the tenant’s water meter had been drilled and a wire had been used to stop the water meter counter. The lessor sent the tenant a written claim for compensation for damage caused by altering the water meter, but did not specify a deadline for the payment. Three days later he sent the tenant a notice terminating the lease of the apartment.

The first instance court agreed with the lessor and concluded that the notice had been legitimately issued. However, the court of appeal then annulled the decision of the first instance court and concluded that the notice was invalid. The case then went to the Supreme Court for a final ruling.

3. Call to rectify objectionable behaviour

In its judgement the Supreme Court further analyses the provisions of Section 2291 CC, which, although they do enable a lessor to terminate a tenant’s lease of an apartment with no notice period, i.e. immediately, also enable the tenant to prevent the lease from being terminated by rectifying (removing) the objectionable behaviour (unlawful situation).

According to the Supreme Court, this must mean an immediate cessation of the unlawful situation, as well as the provision of compensation for damage already incurred. According to the court, the purpose of the provisions of Section 2291 CC is therefore only to allow the “immediate” termination of a lease in cases where tenants that commit a particularly gross breach of their obligations fail to cease such behaviour even after having been requested to do so by the lessor.

From the abovementioned the Supreme Court inferred that cases of notice issued for reasons defined by Section 2291 CC must involve not only a particularly gross breach of obligations, but also behaviour or an unlawful situation that the tenant must rectify or remove. If the nature of the obligation breached prevents the tenant from rectifying the matter, there is no reason to grant a reasonable period of time for “rectification”. Therefore, according to the Supreme Court, such a case does not allow notice to terminate a lease with no notice period, but notice pursuant to Section 2288 (1) a) CC (i.e. due to a gross breach of the tenant’s obligations under the lease) with a three-month notice period.

Therefore, if issuing a termination notice with no notice period, the lessor must always consider whether the breach of the tenant’s obligations can be rectified by the tenant. If the breach of the tenant’s obligations cannot be rectified, the lessor cannot issue the tenant with a termination notice with no notice period, as such a notice would be invalid. In such a case the tenant may only be issued with a termination notice with a three-month notice period.

4. Deadline for rectifying objectionable behaviour

For the issue of a termination notice with no notice period it is not sufficient for the lessor to have requested that the tenant rectify their objectionable behaviour before issuing the notice; the tenant must also be granted a reasonable period of time to rectify the manner. The reasonableness of the period of time granted for the tenant to rectify their objectionable behaviour will always have to be assessed on an individual basis, with regard to the objectionable behaviour to be rectified.

Therefore, if the lessor fails to specify a deadline or specifies an unreasonable deadline, the request does not meet the requirements stipulated in Section 2291 CC, and thus fails to meet one of the substantive conditions for the legitimate issue of a termination notice with no notice period. This would therefore render termination notice invalid.

If a termination notice is invalid the court does not have to decide whether it is legitimate, as the invalid notice has not been lawfully issued and the court will therefore uphold the tenant’s claim. In that case the court will therefore not deal with whether the tenant actual committed a gross breach of obligations, or whether this breach was rectified, and will uphold the tenant’s claim due to the formal invalidity of the notice.

5. Conclusion

This implies that significantly stricter requirements are in place for the issue of a termination notice with no notice period than for the issue of a termination notice with a notice period.

A termination notice with no notice period may be rendered invalid in any of the following circumstances:

• the termination notice is not preceded by a request to rectify the objectionable behaviour;
• the tenant has been requested to rectify their objectionable behaviour, but the lessor has not specified a deadline or has specified an unreasonable deadline;
• the unlawful situation caused by the tenant cannot be rectified by the tenant.

If a notice to terminate the lease with a notice period has been issued in the same wording, none of the above reasons would render the termination notice invalid.

If is therefore recommended that lessors issuing notice to terminate the lease of an apartment with no notice period take special care to meet all the requirements stipulated by the law and, if appropriate, to consider whether it is more appropriate in that particular case to issue a termination notice with a notice period.

For more information, please contact our office’s partner, Mgr. Jiří Kučera, e-mail:jkucera@kuceralegal.cz ; tel.: +420604242241.