Terminating a rental agreement by notice in 2014 and onwards: New rules protect both the tenant and the landlord

Under the former Civil Code, landlords could only terminate a rental agreement on the grounds set forth by law. The former code also distinguished cases in which court approval was necessary. As such, it was not always easy to terminate a rental agreement with a tenant. Tenants were also protected by an obligation that the landlord had to provide them substitute housing or even another apartment or dwelling. This obligation, however, is not included in the NCC.

Without a court and without another apartment

Although the NCC does not stipulate that a court must approve the termination notice or that the landlord must provide another apartment, tenants need not be afraid of being kicked out at any time as the NCC provides various means of protection. It must be noted, however, that tenants should be more alert and follow the grounds and deadlines if they receive a termination notice. Pursuant to the NCC, an agreement may be terminated by a landlord in certain cases only, including for serious grounds such as a gross breach of duties, intentional criminal acts and the fact that the apartment cannot be used on the grounds of a public interest. Where a rental agreement is concluded for an indefinite period of time, one reason for terminating the agreement could also be that the apartment is needed by the landlord or his/her spouse following a divorce or that it is needed for a relative. Unlike under the former Civil Code, the fact that the tenant has more than one apartment is not a reason for giving notice. The notice period is three months in all cases.

When the tenant is breaches its obligations in an “especially gross” manner, the landlord may even terminate the rental agreement without a notice period. Such a breach, for example, includes a failure to pay the rent for more than three months, irredeemable damage to the apartment, or use of the apartment for purposes outside the scope of the agreement. In those events, the landlord is entitled to request that the tenant vacate the apartment without undue delay,  within at least one month. This is conditional upon the fact that the landlord states the concrete breach in the notice and provides the tenant with a period for remedying the breach.

The NCC also takes into consideration situations where a rental agreement is concluded for a definite period of time but the circumstances under which the parties concluded the agreement changed. In cases where it is no longer reasonable to request that the tenant continue renting the apartment, the tenant may terminate the rental agreement. This relates, for example, to situations where the tenant must move to another place due to a change of employment. The NCC, however, does not stipulate what the notice period should be in such situations. Although opinions vary in this respect, we believe that a standard three-months’ notice period should apply.

Notices vary

As regards the proper way to give notice, it must be in writing and delivered to the tenant, which are conditions that were also contained in the previous Civil Code. Up until the end of 2013, the notice had to contain a reason, notice period and instructions to the tenant that he may seek to have the notice deemed invalid. The NCC retains the conditions regarding the reason and instructions, but where the landlord terminates the rental agreement because he needs the apartment, the landlord must start using the apartment for said reason within one month after the tenant vacates the apartment. If the landlord fails to do so, he must compensate the tenant for damage (as under the previous Civil Code in selected events) or re-rent the apartment to the tenant. The one-month deadline, however, will not commence if the landlord starts reconstructing the apartment provided he starts the reconstruction within two weeks after the apartment was vacated.

By way of conclusion, a note to landlords: If a rental agreement was to terminate within a set deadline and the tenant remains in the apartment after the deadline has expired, the landlord must request in writing that the tenant vacate the apartment. If the landlord fails to do so within three months, the rental will be renewed automatically for the term of the rental agreement, even for up to two years. While under the former code automatic renewal was possible only if the parties expressly and contractually agreed, it is vice versa as of 1 January 2014: rental is automatically renewed by law unless expressly excluded by the parties.

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