When can a rental agreement be terminated extraordinarily? 5 common misconceptions

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According to the law, a fixed-term lease agreement can be terminated in three cases:

• Ordinarily, with a three-month notice.

• By mutual agreement, at a time agreed upon by both parties.

• Extraordinarily, with a valid reason.

Extraordinary termination of a lease agreement is permitted under the Law of Obligations Act (§ 314-319) if the reason for termination is sufficiently compelling and the continuation of the contract is no longer in the interest of both parties.

For example, significant breaches of the contract by the tenant or delays in paying the rent are considered valid reasons. Another valid reason could be if the rented property is in such a condition that the use thereof may involve significant hazard to human health.

It is mistakenly believed that minor inconveniences or changes in personal life, such as relocating due to a better job offer, provide grounds for extraordinary termination. This can lead to situations where one party wants to terminate the contract immediately without a valid reason and refuses to fulfill their obligations.

Here are some examples of cases received by Rendin that people consider extraordinary, but which actually only provide grounds for regular termination.

It is quite common for tenants to seek extraordinary termination of the rental agreement due to minor inconveniences. This might include issues such as the number of ceiling lights, the size of the water heater, an uncomfortable bed, or spiders living in the apartment.

“Circumstances that are visible before signing the rental agreement and are not hidden defects do not provide grounds for extraordinary termination. To prevent future disputes, it is important to thoroughly inspect the apartment before signing the lease and ensure that everything meets your expectations,” explains Lia Siht, Head of Legal at Rendin.

The tenant informed the landlord that they wished to terminate the rental agreement immediately. While the tenant had no complaints about the apartment itself, they were dissatisfied with the activities of the housing association. Issues included overly small trash bins, poorly cleaned corridors, and no sand or salt spread on icy sidewalks during the winter.

“In such cases, communication with the owner or the housing association is necessary. For long-term tenants, the owner might grant permission for the tenant to attend housing association meetings and address important issues. If such permission is not granted, the tenant should report the problems to the owner and ask them to relay these concerns to the housing association,” explains Lia Siht.

The tenant's upstairs neighbor experienced a water leak in their bathroom, which required the tenant's ceiling to be replastered. Due to the inconvenience caused by the flooding, the tenant wanted to terminate the lease immediately and move out as soon as possible.

“If the apartment did not become uninhabitable due to the flooding, there is no legal basis for extraordinary termination of the lease. The landlord is responsible for restoring the apartment, and the tenant must accept the inconvenience caused by the repairs. If the tenant is forced to move out temporarily due to extensive repairs, they do not have to pay rent for the period during which they cannot use the apartment for its intended purpose,” explains Lia Siht.

The tenant moved into the apartment with their partner, but after a while, they separated. The tenant wanted to terminate the rental agreement immediately and move out as soon as possible because they could no longer afford the apartment on a single income.

"Sudden changes in life are not grounds for extraordinary termination of the lease agreement. In such a situation, the first step should be to communicate with the landlord and find a compromise. It is usually agreed that the search for a new tenant will begin immediately and the lease will be terminated when a new tenant is found. If the tenant also contributes to the search, a new resident can be found very quickly," says Siht.

The landlord informed the tenant that they wish to sell the apartment and terminate the lease extraordinarily so that the apartment can be shown to potential buyers. “In fact, the sale of the apartment is not a valid reason for the extraordinary termination of the lease agreement and getting rid of the tenant," says the legal expert.

“In case of selling the apartment, even regular termination of the lease is not necessary, as the apartment can be sold with an existing lease. If the buyer is an investor, there is no need to replace the tenant; the lease can be transferred to the new owner. If the buyer wants the apartment for personal use, then either the landlord or the buyer must terminate the lease ordinarily or by mutual agreement," he explains.

Siht adds that if the tenant is living in the apartment during the sale process, all viewings must be coordinated with them, and times should be arranged when potential buyers can view the property.

If one party wishes to terminate the lease earlier than the three-month notice period, it is essential to start with open communication. Typically, a mutual compromise can be reached without the need for third parties.

Lia Siht advises tenants not to panic about the three-month notice period if their circumstances have changed significantly and they can no longer afford the apartment. “Although tenants are responsible to the landlord for three months, the more they assist the landlord in finding a new tenant, the quicker the situation can be resolved. If there are no significant obstacles in the search, a new tenant can often be found within a few weeks,” she adds.

She emphasizes that if a new tenant is found before the agreed lease termination date, the landlord has no right to charge rent from both tenants for the overlapping period. “Many landlords believe that if they have an agreement with the tenant for the lease to end in three months, but a new tenant is found within one month, they can charge rent from both tenants during that period. However, this is not the case and is considered unjust enrichment,” explains Siht.

The legal expert advises landlords that if someone wishes to move out, there is no point in keeping them in the apartment. “No one wants a tenant in their apartment who is struggling to pay. It is reasonable to work together to find a new, financially capable tenant as quickly as possible,” she concludes.