Following an overview of the changes to the sales regime under the new Book 7 of the Civil Code, we highlight a few important changes in common lease law.
The new rules simplify and modernise (common) lease law, without amounting to a revolution. Although specific lease regimes, such as residential and commercial leases, are governed at the regional level and therefore do not change with Book 7 of the Civil Code, the common law remains essential as a safety net where the special regimes do not apply (such as with offices and warehouses) or do not offer a (complete) solution.
The overall trend appears to be that the landlord takes on more obligations. The parties can, however, deviate from these, since most of the provisions remain of a supplementary nature.
Mandatory adaptations due to new regulations: the landlord bears the cost
Just as with sales, Book 7 also introduces the concept of conformity for leases. In the case of a lease, however, this is a continuing obligation. The landlord therefore not only has an obligation to deliver conforming property at the start of the lease, but the leased property must continue to meet the criteria the contract stipulates and what the tenant may reasonably expect throughout the entire lease period.
This ongoing conformity would also apply to works necessary as a result of new regulations, and that is a change. Under the old law, case law classically held that adaptation works resulting from new regulations (such as safety standards) arising after the start of the lease were, in principle, borne by the tenant. According to its drafters, the new Book 7 would reverse this. The rationale is that the landlord remains responsible for the structural and legal conformity of its (im)movable property throughout the entire lease period. The impact of a regulatory change can be significant, for example in the context of a renovation obligation, such that landlords may be required to make substantial investments.
Time limits in the case of non-conformity
As with sales, the tenant must notify the landlord of a defect within a reasonable time after discovering it. Unlike with sales, however, late notification does not cause the right to repair to lapse entirely. Thus, the tenant retains the right to have the property repaired by the landlord. Late notification does cause the tenant to lose the right to invoke the sanctions relating to loss of use and enjoyment suffered. Moreover, the tenant is liable to compensate for the damage caused by his own negligence.
Apart from the notification period, a two-year limitation period also applies. Thus, a claim based on a conformity defect becomes time-barred two years after the termination of the contract. This aligns with the principle that the obligation to make the property available in a conforming manner continues throughout the entire lease period and therefore cannot become time-barred as long as the lease continues.
The claim for compensation for loss of use and enjoyment, on the other hand, becomes time-barred two years after the tenant's notification of the non-conformity. In other words, if the tenant does not bring a claim within two years of the notification, its right to compensation for the loss of use and enjoyment suffered prior to the bringing of the claim is time-barred.
Clear rules for fit-out and alteration works
Tenants often carry out works at their own expense to adapt the leased property to their needs. The old common lease law contained no specific rules on whether the tenant could ultimately obtain compensation for these investments.
Two questions are relevant:
1) May the tenant carry out alteration works?
In principle, no, unless the landlord has explicitly agreed to it or unless the works are consistent with the intended use and can easily be removed by the tenant at the end of the lease without causing damage (e.g., freestanding cabinets or movable partition walls).
2) Does the tenant receive compensation if he does not remove the works by the end of the lease?
Book 7 provides clarity on this. The rules distinguish between:
- Removable works: if the landlord chooses to retain the works, he must compensate the tenant on the basis of the principles of unjust enrichment. That compensation is calculated on the basis of the added value realised, with the costs borne by the tenant himself as the upper limit.
- Permitted non-removable works: the landlord must compensate the tenant on the basis of the principles of unjust enrichment.
- Non-permitted non-removable works: for these, the landlord owes no compensation.
Judicial protection upon termination
Agreements can contain an express termination clause (uitdrukkelijk ontbindend beding/clause résolutoire expresse), but for leases of immovable property such clauses must also under the new law be deemed unwritten. Book 7 confirms the prohibition on express termination clauses. The provision is mandatory law, protecting both the landlord and the tenant. Neither of them can therefore rely on an express termination clause. For the leasing of movable property, however, the express termination clause is permitted.
Moreover, unilateral nullification and termination by notification are also excluded for the lease of immovable property. The legislature thus considered judicial protection upon the termination of a lease relating to immovable property to be crucial.
The lease rules apply mutatis mutandis to loans for use
The lease rules apply mutatis mutandis to loans for use (bruikleen/prêt à usage), with the exception of the rules relating to rent and a number of provisions listed in Book 7 of the Civil Code.
