Late termination of lease not always fatal

A lease must be terminated in time. The notice periods are stated in the law or in the lease agreement. If notice of termination is provided too late it may not be effective, so that the lease will continue (for years). But in specific circumstances a notice provided too late may be considered to be in time.

A lease must be terminated in time. The notice periods are stated in the law or in the lease agreement. If notice of termination is provided too late it may not be effective, so that the lease will continue (for years). But in specific circumstances a notice provided too late may be considered to be in time. So when is a notice provided too late still valid?

Delay

In the event of a termination of a lease a notice period has to be observed. The notice period provides the recipient with the opportunity to look for an alternative tenant or alternative space.

Statutory period

The statutory period for the termination of a lease is:

• for housing accommodation:
  • for lessees: not shorter than one month (unless a shorter period has been agreed upon) and not longer than three months
  • for the lessor: not shorter than three months, plus 1 month for each year the lease agreement lasted, with a maximum of 6 months (unless a longer period has been agreed upon)

• for 290 retail space (shops, hospitality industry):
  • for lessor and lessee: a minimum of one year

• for 230a space (offices and other commercial space):
  • for lessors and lessees: at least one month (if termination is required)

What to do if you have sent your notification too late

According to our experience and case law, lessors and lessees are often late in providing notice of termination. If the recipient insists on renewal of the lease, the court will have to decide whether the lease – even if notice of termination is provided too late – will actually be terminated. In doing so, the court will weigh the interests of lessee and lessor.

If the lessee has provided the notice of termination of the lease too late, the court will look into whether the lessor still has sufficient time to find an alternative lessee, and what the disadvantage of the lessee would be if the lease will be continued. The court will pay attention to:

• the ground for the delay
• the period of the delay in relation to the duration of the notice period and the lease (a delay will not be tolerated easily if the notice of termination should have been sent shortly after the conclusion of the lease)
• whether the lessor knew or should have known before the end of the termination period that the lessee wanted to terminate the lease (for instance, by statements of the lessee or if the lessee no longer occupied/exploited the leased object)
• the financial muscle of the lessee in relation to the financial muscle of the lessor.

Other formalities

Except that a termination must be sent in time, additional formalities apply that must be observed with regard to a termination of a real estate lease:

• in writing
• by registered post or bailiff’s notification
• by the deadline or by a date agreed upon for payment
• and – for lessors of housing accommodation and 290 retail space – by indication of the statutory grounds for termination

A lease agreement may also contain other agreements.

Why are there requirements?

The requirements that have to be met when terminating a lease serve different purposes, for instance:

• the indication of a statutory ground for termination provides lessees with the opportunity to defend themselves in court against the termination of the lease
• sending by bailiff’s notification or registered post (with return with signature) provides the sender with proof that the recipient has received the termination and the notice period was observed.

If a formality is breached, it is often relevant if and to what extent the other party suffers a disadvantage as a result of this. If the recipient’s interests – compared to the sender’s interests and the extent to which a formality has been breached – will hardly or not at all be affected, the courts will be less strict in observing the requirements.

Conclusion

If you want to terminate a lease agreement, you should observe the applicable (statutory and contractual) notice period and formalities. This prevents discussions and unnecessary procedures. However, if certain formalities have not been observed, a termination is not necessarily void. A delay in notice of termination can be effective in certain circumstances and lead to termination of the lease.

More information

Would you like to know which notice period applies to your lease and when you have to send your notice of termination of the lease at the latest? Would you like to learn if your termination of the lease meets the applicable requirements? Or do you have any other questions regarding your lease? Please contact us: