1. Introduction

Naturally one of the most fundamental legal issues in landlord-tenant law is the question of terminating the lease relationship. In case of a fixed-term lease, the crucial question is whether or not and, if so, under what conditions the tenant can terminate the lease before the end of the agreed lease term. This article deals with this issue.

Many landlords mistakenly believe that the tenant cannot terminate a fixed-term lease for an apartment and must stay in the apartment, or at least pay rent and service fees until the agreed lease term expires. Thus, there are common disputes between tenants and landlords, for example, in situations where the tenant notifies the landlord that he/she is moving and does not wish to continue the lease, but the landlord insists the tenant continues to fulfil his/her obligations until the end of the lease relationship. In such situations, some landlords require tenants to find another tenant to take their place.

Let’s take a look at whether or not a tenant may terminate a fixed-term lease before the agreed period and, if so, under what conditions, and whether he/she must meet certain conditions in such a case, such as finding a replacement in the form of a new tenant.

If a fixed-term lease is negotiated in the lease agreement, it generally applies that such a lease relationship should end on expiry of the agreed term. However, there are exceptions to this rule and, in certain circumstances, the tenant can actually cancel the lease before the expiry of the agreed period.

In our opinion, early termination of a lease by the tenant is possible in the following cases:

2. Ability to terminate the lease agreed directly in the contract

The ability to terminate a fixed-term lease by the tenant can be agreed directly in the lease agreement, and this quite broadly in terms of contractual freedom, i.e. in principle for any reason or without giving any reason at all.

However, this option is not very common, as landlords often refuse tenants’ requests to amend reasons for termination differently from the law and generally insist on compliance with their “contract”.

3. Change in circumstances

A new aspect introduced by Act No. 89/2012 Coll., the Civil Code (hereinafter “CC“) is the tenant’s ability to give notice pursuant to Section 2287, under which the tenant may terminate the lease of an apartment before the agreed term if the circumstances under which the parties concluded the lease agreement change to such an extent that the tenant cannot be reasonably required to continue the lease.

This provision is highly problematic for several reasons, which will be analysed below.

3.1 Reasons for termination

The first logical problem with the above mentioned provision is that it does not include a demonstrative list of what should be considered as the reasons for a change in circumstances. It is clear that the tenant and landlord may have a different view of what is and is not a substantial change in circumstances.

Interpretative Opinion No. 21 of the Expert Group of the Commission on the Application of New Civil Legislation of the Ministry of Justice of 3 April 2014 (hereinafter “Opinion“) gives one such reason as, for example, a situation where the tenant loses his/her job and only finds a new one in a place to which it would not be possible to commute without difficulty from his/her current residence. In our opinion, consideration may then also be given to medical reasons for which the tenant will be forced to leave his/her current residence or in the case of foreign nationals, for example, the imposition of a deportation sentence.

Other reasons will undoubtedly be dealt with by case law. In the current situation, it is clear that reasons for termination based on a substantial change in circumstances may be disputable in many cases.

3.2 Length of notice period

Another problematic aspect of this provision is the absence of a rule on the length of the notice period, which constitutes a gap in the law.

The length of the notice period was, however, considered in the Opinion, stating that it must be concluded, using an analogy, that the notice period is 3 months. Given that only the interest of the tenant is protected in this case and that the landlord did not participate, could not have foreseen or influenced such a change in circumstances, the regulation of the notice period most favourable for the landlord in terms of content and purpose is the longer period of three months according to the Opinion on the case in question.

3. 3 Form of notice

Similarly, the provision does not address the form of notice and, in particular, does not specify whether or not and, if so, to what extent the tenant must describe and demonstrate the reasons for termination.

With regard to the form, it can be concluded with regard to Section 2286 of the CC that notice must be given in writing. Failure to comply with the written form is penalised by relative invalidity.

With regard to the specification of reasons, according to the Opinion, it is the duty of the tenant to define and specify the grounds for termination in the notice thereof, it is not sufficient to state that there has been a change in circumstances.

It can therefore be summarised that, in any event, notice should be given in writing and that it should contain a factual definition of the specific reasons for termination which, in the opinion of the tenant constitute a substantial change in circumstances. Failure to comply with these requirements, in our opinion, means that notice can be considered relatively invalid.

4. Sanction grounds for termination – breach of obligation by the landlord

The CC also allows the tenant to terminate a fixed-term lease due to a breach of the landlord’s obligations. These are general grounds applicable to all lease relationships, not just the lease of an apartment. In all cases, such notice has no notice period, therefore, according to Section 2231 (2) of the CC, the grounds for termination must be specified in the notice. These concern the following cases:

• if the landlord does not repair damage or a defect, even in an additional grace period, and the damage or defect is due to circumstances not caused by the tenant and if the delay by the landlord in repairing the damage or defect or the damage or defect itself is a gross breach of the landlord’s obligations (Section 2266 CC),
• if the use of the apartment is prevented by a third party’s rights, and the landlord does not remedy this situation, even in an additional grace period, and if the delay by the landlord in removing the third party’s rights or third party’s rights themselves are a gross breach of the landlord’s obligations (Section 2268 (1) CC),
• if the use of the apartment is prevented by the provisions of law or the decision of a public authority issued on the basis of the law and if the landlord fails to remedy this legal defect, even in an additional grace period, and if the delay by the landlord in the removal of this legal defect or the legal defect itself is a gross breach of the landlord’s obligations (Section 2268 (2) CC),
• if the apartment needs essential repair, and it is not possible to use the apartment at all during this repair (Section 2210 (3) CC),
• if the apartment becomes unusable for the intended purpose or if the purpose is not agreed, for the usual purpose, for reasons not attributable to the tenant (Section 2227 CC),
• if the landlord breaches its obligations in a particularly serious manner and thus causes the tenant considerable harm (Section 2232 CC).

In all the cases described above, the tenant may terminate the fixed-term lease of an apartment pursuant to Section 2227 of the Civil Code, i.e. without a notice period.

5. Conclusion

 In view of the above mentioned, it can be concluded that the assumption by some landlords that the tenant cannot terminate the fixed-term lease of an apartment is completely wrong.

 In principle, the reasons for which a tenant can terminate a fixed-term lease for an apartment can be divided into agreed reasons, sanction reasons (breach of the landlord’s obligations) and reasons based on a substantial change in circumstances.

 While agreed and sanction reasons can be regarded as relatively unambiguous, and do not pose significant problems in practice, reasons based on a change in circumstances can be regarded as disputable and extremely problematic in most cases, especially in view of the lack of regulation.

 However, the tenant is not obliged to look for a replacement as often required by landlords in any of the above cases. This condition can only be imposed by the landlord in case of the termination of a lease by agreement.

 Therefore, if you are dealing with notice due to a substantial change in circumstances, whether as a landlord or as a tenant, we can only recommend that you seek qualified legal assistance.

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