Both the Tenancy Act and the Commercial Tenancy Act contain rules on the landlord's right of termination that the landlord must familiarize themselves with before sending the termination letter to the tenant.
This article is not an exhaustive review of all termination options, as only two of the grounds for termination are discussed - termination by the landlord for own use and termination by the landlord due to demolition. These are the grounds for termination that are often used by landlords in practice.
The article will thus not deal with the freely terminable leases under section 170 of the Danish Rent Act and section 61(1) of the Danish Business Lease Act.
The important formal requirements that apply to the design of a termination letter will also not be covered in this article, but the landlord must comply with these before the termination is valid.
Termination for your own use
If you as a landlord decide to use the lease yourself, section 171(1)(1) and section 61(2)(1) of the Danish Tenancy Act gives you the right to terminate the tenant.
Residential rental conditions
The landlord must be aware that this right of termination is limited by the following conditions under section 172 of the Danish Rent Act:
The landlord must intend to occupy the rented space
In the case of a residential apartment, the landlord must occupy the property himself. It's not enough for the landlord to simply intend to occupy the apartment - there must be an intention that the lease will be used as a residence by the landlord, and it's the landlord who must be able to substantiate this intention.
If the landlord is a company, the landlord cannot use this right of termination, as a company cannot occupy the lease. It is also out of the question for the company to terminate the lease on the grounds that it intends to use the lease for office space.
If the landlord never intended to occupy the lease, the termination is considered null and void. The consequence of this is that the tenant can generally demand to be reinstated in the lease. The landlord will also risk being liable for the loss the tenant has suffered as a result of the unjustified termination.
The termination must be reasonable
In addition to the fact that the landlord must intend to occupy the lease, there is also a consideration for the tenant - the termination must be reasonable based on an assessment of both the tenant's and landlord's circumstances. What exactly is included in this assessment of reasonableness depends on the specific circumstances, but as factors that must play a role in the assessment, the provision mentions: How long the landlord has owned the property and the tenant's ability to find other suitable accommodation. In addition, factors such as the parties' age, health, finances and family circumstances may also be included in the fairness assessment.
If the fairness assessment is not in favor of either the landlord or the tenant, the landlord's property rights may be what causes the landlord to succeed in the termination.
Other limitations
In addition, other restrictions in section 172 of the Danish Rent Act apply.
Is it a case of mixed tenancies - i.e. leases that are used for both residential and commercial purposes - the landlord cannot terminate for the purpose of running a business in the same industry as the tenant.
Is the rented property a condominiumthe main rule is that the tenant cannot be terminated with reference to own use. In addition to the intention of own use, the termination will also be conditional on the lease being entered into after the division of the property into condominiums. If the agreement was entered into on or after January 1, 1980, the tenant must be informed at the time of the agreement that it is a condominium and that termination can be made with reference to own use. If the lease was entered into on or after July 1, 1986, it is a condition that the landlord has previously occupied the lease.
If the tenant is a tenant representative, the landlord cannot terminate the tenant.
If the landlord occupies an apartment in the property at the time of termination, the landlord must offer the tenant to take over the landlord's apartment.
If the property is jointly owned by several people, the owners can only terminate the tenant of one residential apartment.
Notice of termination
If the landlord meets the conditions for terminating the lease according to this provision, termination can take place with a minimum notice period of 1 year, and the parties cannot agree on a shorter notice period.
Offer of a replacement apartment
If the landlord terminates the tenant under section 171(1)(1) of the Danish Rent Act, it is a condition under section 174(1) of the Danish Rent Act that the landlord must offer the tenant another apartment in the property if such an apartment becomes available for occupancy within three months after the tenant must have vacated the terminated apartment. The consequence of not offering the tenant a replacement apartment does not necessarily invalidate the termination, but rather that the landlord may be liable for the tenant's documentable losses.
Business rental conditions
The provision on termination of business leases for own use is found in section 61(2)(1) of the Business Lease Act.
Want to use the lease and identity requirements
Here it is also a requirement that the landlord actually intends to use the lease - the landlord must make it likely that they have a real need to use the lease themselves.
The landlord should also be aware that you cannot simply insert a group company into the lease - in other words, there is a strict requirement for identity coincidence between the company that owns the property and the company that will use the lease in the future.
Reasonableness assessment
In the case of commercial leases, an assessment of reasonableness must also be made, where the landlord's interest in taking over the lease must be weighed against the tenant's interest in remaining in the lease, taking into account, among other things, how long the landlord has owned the property.
In the case of a business-protected lease, the assessment of fairness is sharpened in the tenant's favor, as the landlord is not entitled to terminate a business-protected tenant if you intend to run a business in the same industry as the tenant. You cannot, for example, terminate a hairdresser and then use the lease to run a hair salon yourself if the lease is commercially protected.
The landlord's property rights must also be taken into account in a fairness assessment in commercial leases, which can be decisive where the fairness assessment does not fall in favor of either the landlord or the tenant.
Notice of termination
If the conditions are met, termination can be made with a minimum of 1 year's notice, and the parties cannot agree on a shorter notice period.
If the landlord has to carry out renovations that necessitate the tenant's vacating the premises, the landlord may consider whether the termination must instead be justified in accordance with section 61(2)(2) of ELL, as the notice period will then be shorter, see further below under section 2.2.
The landlord wants to demolish or rebuild the lease
Residential rental conditions
If you as a landlord can document that the property is to be demolished or rebuilt, you can terminate the tenancy under section 171(1)(2) of the Rent Act.
Demolition means that the building is removed and the apartment is abandoned. In this situation, the termination is conditional on you being able to document that the building is to be demolished, which is usually done by presenting a demolition permit from the municipality, and the clear starting point is that this demolition permit must be granted at the time of termination.
You should also be aware that if the building to be demolished contains accommodation with kitchens and the accommodation is or has been used for year-round living - which is usually the case - consent must be obtained from the local council. This consent must be given at the time of termination.
In order to best secure its position, the landlord should therefore make sure to obtain consent from the local council and obtain a demolition permit before terminating the lease as a result of demolition.
When it comes to remodeling in residential tenancies, it is important to note that the practical starting point is that remodeling as a general rule cannot lead to termination.
The termination in case of remodeling is conditional upon one of the following special cases being met:
- that the property will be covered by the Act on Public Housing etc. after remodeling,
- the remodeling is done as a result of expropriation, or
- that the conversion is to fulfill a purpose for which expropriation may be carried out.
Offer of a replacement apartment
In the same way as for termination for own use, the landlord must also be aware that the tenant must be offered a replacement apartment if another apartment becomes available in the property no later than 3 months after the date on which the terminated tenant must have vacated the property, cf. section 174(1) of the Danish Rent Act. Again, failure to comply with the offer of a replacement apartment does not necessarily invalidate the termination, but the landlord may, however, be liable for the tenant's documentable losses.
There are also special rules on replacement apartments when converting to public housing for the elderly or public housing for young people under the Public Housing Act, cf. section 174(3-4) of the Rent Act.
Business rental conditions
In commercial leases, the lease can also be terminated under section 61(2)(2) of the Danish Commercial Tenancy Act on the grounds that the property is to be demolished or rebuilt. However, if the termination is due to rebuilding, it is assumed that the rebuilding is of such a nature that the tenant must vacate the premises. This means that if the remodeling does not preclude the tenant from physically using the rented premises during the remodeling, a termination cannot be carried out.
There is also no requirement for the landlord to disclose his motive or reasons for demolition or conversion, and if the landlord wants to use the lease after a possible conversion, the lease can still be terminated under section 61(2)(2) of the Commercial Tenancy Act.
However, the landlord must take into account whether the lease is business protected.
If the lease is not commercially protected, the landlord can terminate the lease without making a fairness assessment of the parties' circumstances.
However, if the lease is commercially protected, a reasonableness assessment must be made, taking into account, among other things, how long the business has been operating in the leased premises, the tenant's improvements to these and the value of the clientele.
The landlord's property rights must also be taken into account in a fairness assessment in commercial leases, which can be decisive where the fairness assessment does not fall in favor of either the landlord or the tenant.
GET CALLED ABOUT LEASE TERMINATION AND WHAT REQUIREMENTS APPLY
(The article "Terminate a lease for your own use or due to demolition?" we wrote for the magazine Danske Udlejere, March 2024)
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.