1. Termination
Termination constitutes one of the most complex forms of extinguishing an urban lease agreement. Unlike other mechanisms of contractual cessation, termination is characterised by the fact that one of the contracting parties ends the contract by invoking the other party’s breach. This distinction is fundamental to understanding the legal concept, as it clearly differs from revocation, which depends on the mutual agreement of the parties, denunciation, or opposition to renewal, where unilateral declarations of intent are made to end the contract with prior notice or at the end of the term, without the need to invoke specific grounds.
In termination, the non-breaching party ends the contract precisely because the other party has failed to comply with its contractual obligations. Article 1083(1) of the Civil Code provides that “either party may terminate the contract, under the general terms of the law, on the grounds of the other party’s non-performance.” However, not every breach constitutes valid grounds for termination. The breach must, “due to its seriousness or consequences, render it unreasonable to expect the other party to continue the lease,” as stipulated in paragraph 2 of the same article.
With Law no. 6/2006 of 27 February, a general clause was introduced, meaning that the landlord was no longer limited to the illustrative list set out in Article 1083(2) of the Civil Code.
2. Exercise of Termination
Termination of the lease may occur in two distinct ways, pursuant to Article 1047 of the Civil Code: judicially or extrajudicially.
The landlord may only terminate extrajudicially, that is, by written notice addressed to the tenant, in very specific and limited situations. This possibility is restricted to cases of non-payment of rents, charges or expenses, or where the tenant opposes works ordered by a public authority (Articles 1083(3) and (4) of the Civil Code). In all other cases, it is necessary to resort to the courts, by way of declaratory action under ordinary procedure, commonly known as an eviction action.
3. Breach of the Obligation to Pay Rents, Charges and Expenses
3.1 Delay Equal to or Exceeding Three Months
Non-payment of rent has historically been the most frequent ground for termination of lease agreements. The complexity of this matter requires special attention to the rules on time limits and the legal nuances that may determine the success or failure of an eviction action.
Lease agreements usually include a clause stating: “Rent falls due on the first working day of the month preceding the month to which it relates.” This provision reflects Article 1075(2) of the Civil Code, which provides that “in the absence of agreement to the contrary, if the rents correspond to calendar months, the first shall fall due at the time of conclusion of the contract and the subsequent ones on the first working day of the immediately preceding month.”
Thus, on 1 January, the rent for February falls due. If the tenant fails to pay on that date, he is in arrears as from 2 January, and not on the 1st, the due date. However, this initial delay of one day, or even up to eight days, is legally irrelevant and produces no practical consequences, because under Article 1041(2) of the Civil Code, “the right to compensation or to terminate the contract lapses if the tenant remedies the default within eight days from its commencement.”
If rent is not paid by 9 January, the landlord acquires the right to claim compensation of 20% of the rent amount.
The real ground for termination arises when the delay in paying rent, charges or expenses borne by the tenant is equal to or exceeds three months. In such cases, the landlord may terminate the contract (Article 1083(3) of the Civil Code). It is not necessary that three separate rents remain unpaid; what matters is that the delay lasts for three months. In the example of rent falling due on 1 January, if not paid, the three-month period ends on 1 April.
Default is not limited to non-payment of rent; it may also include charges such as condominium fees (if agreed) or utility bills (if contracts are in the landlord’s name and payment has been agreed with the tenant).
In any case, default must be established.
3.1.1 Continuation of the Contract
One of the most interesting features of the termination regime for non-payment is the possibility of reinstating the contract. Termination by the landlord, when made by written notice and based on non-payment of rents, charges or expenses, becomes ineffective if the tenant remedies the default within one month (Article 1084(3) of the Civil Code).
This provision grants the tenant a final opportunity to preserve the contractual relationship. Once the notice of termination has been received, he has one month to pay and maintain the contract. This option may only be exercised once per contract, preventing abuse by bad-faith tenants (Article 1084(4) of the Civil Code).
Alternatively, the landlord may opt to bring an eviction action. In this case, the right to terminate ceases if the tenant, by the deadline for lodging a defence, pays, deposits or consigns the sums due plus 20% compensation (Articles 1048 and 1041 of the Civil Code).
3.2 More than Four Occurrences of Default
In addition to prolonged delay, the law also provides for another ground relating to repeated default. It is deemed unreasonable to require the landlord to continue the lease when the tenant is more than eight days late in paying rent on more than four occasions, consecutive or not, within a twelve-month period (Article 1083(4) of the Civil Code).
This period does not necessarily coincide with the calendar year. What matters is that, once the first default occurs, the fourth must occur within one year of the first. Thus, if the first default occurs on 9 January, the fourth must occur by 1 January of the following year.
Unlike the previous case, the tenant cannot prevent the termination of the contract in these circumstances. However, Article 1083(6) of the Civil Code provides that termination depends on the sending of a registered letter with acknowledgement of receipt, after the third default, informing the tenant of the landlord’s intention to terminate the contract.
4. Opposition to Works Ordered by a Public Authority
Article 1083(3) of the Civil Code provides for another ground for extrajudicial termination: the tenant’s opposition to works ordered by a public authority. This often arises in the context of municipal notifications.
The tenant may, in this case, avoid termination of the contract in the same way as for non-payment, namely, by ending the opposition within one month after notification.
5. Breach of Rules on Hygiene, Quiet Enjoyment, Good Neighbourhood or Condominium Regulations
These situations fall within the general concept of “non-performance which, by reason of its seriousness or consequences, renders it unreasonable for the other party to continue the lease.” Judicial intervention is necessary, since termination must be requested and assessed by the court.
With regard to hygiene rules, the breach must effectively affect the leased property. For example, if the tenant uses the property to store objects collected from the street that produce foul odours.
As regards condominium regulations, the tenant must comply with them in relation to the use of common areas. Legislation requires the condominium regulations to be mentioned in the lease agreement and a copy attached, although in practice this is often omitted. It is nonetheless advisable to ensure that the tenant is aware of the condominium rules.
6. Use of the Property Contrary to Law, Morality or Public Order
Both criminal and civil illegality may constitute grounds for termination, provided the use is gravely reprehensible, such as prostitution, illicit gambling, or storage of stolen goods.
7. Use of the Property for a Different Purpose
An urban lease may be for residential or non-residential purposes. Where nothing is stipulated, the property may be used in accordance with its aptitudes, as set out in the occupancy permit. Allocation to a different purpose constitutes grounds for termination, since the landlord leased the property for a specific use.
7.1 Residential Use
In residential leases, the tenant may carry on any domestic industry, even if subject to taxation, unless expressly prohibited (Article 1092(1) of the Civil Code). Domestic industry is deemed to be that carried on at the residence, with no more than three employees engaged.
7.2 Non-Residential Use
With the NRAU, the distinction became one between residential and non-residential leases. If the contract makes a generic reference to “non-residential use,” the tenant may change the initial use, provided that the occupancy permit allows it. If there is express reference to a specific use (e.g., grocery shop, clothing store), any change requires the landlord’s prior consent.
Case law has been flexible with regard to ancillary activities. In a café, nothing prevents the sale of newspapers or lotteries. This is the so-called “theory of the accessory.”
8. Non-Use of the Property for More than One Year
The purpose of a lease is the use of the property. If the tenant does not occupy or use it, deterioration occurs. Before the NRAU, the wording was “lack of permanent residence.” Case law held that the tenant must reside permanently in the leased property.
Evidence may be provided in various ways, most commonly through utility consumption (water, electricity, gas), tax residence, or testimony of neighbours. Alternating residence is acceptable, provided there is a temporal balance and the property is not relegated to secondary use.
8.1 Justified Absence
8.1.1 Force Majeure
This means unforeseeability and inevitability making performance impossible.
8.1.2 Illness
Relevant only if it temporarily prevents use. It must be reversible, not chronic, and the sole cause of absence. The burden of proving reversibility rests with the tenant.
8.1.3 Absence for Military or Professional Duty
Non-use is lawful for up to two years. After this period, there is an additional “tolerance period” of one year before termination may be invoked.
8.1.4 Occupation by a Person with Residence of More than One Year
The tenant may be absent without giving rise to termination if the property is occupied by someone with a right of residence who has lived there for at least one year prior to the tenant’s absence. This includes cohabitants, relatives, but not guests.
8.1.5 Absence for Care of Persons with Disability
This covers absence resulting from providing care to persons with a disability of 60% or more
9. Transfer of Use of the Property
9.1 Sublease
A derivative contract in which the tenant transfers the use of the property to another person in exchange for rent. It requires the landlord’s consent and must be notified within 15 days. Without authorisation, it is invalid; without notification, it is ineffective. In both cases, the landlord may seek termination of the contract.
9.2 Commodate (Gratuitous Loan)
A gratuitous loan agreement.
When a commodatum is made without the landlord’s authorisation or the required notification, it is unlawful and the landlord therefore has the right to request termination of the lease, thereby protecting his possession and rights.
10. Other Grounds for Termination
10.1 Works and Alterations
The tenant requires written authorisation for works. Case law requires assessment on a case-by-case basis, considering the scale and relevance. Minor alterations necessary for comfort are lawful. Lack of consent may lead to termination of the lease.
10.2 Charging Rent Higher than Permitted
The tenant may not charge the subtenant more than 20% above the proportion due, unless otherwise agreed.
10.3 More than Three Lodgers
Housing more than three people continues to constitute grounds for eviction, either for breach of contract or unauthorised subletting.
11. Expiry of the Right to Terminate
The limitation periods are one year for judicial action (from knowledge of the fact) or three months for extrajudicial notification. For continuing breaches, the period only begins once the unlawful act ceases.
