Termination of the Land Lease Agreement
Notice of Termination of the Land Lease Agreement
A land lease agreement for a fixed term terminates upon expiry of the term without the need for a notice.
One may serve notice of termination on a land lease agreement for a fixed term only on statutory grounds set forth in the Tenancy Act, and the parties may not agree on other grounds for termination in the agreement, except in agreements for lease of developed farmland and agricultural and lease of other land. An agreement regarding lease of a plot of land cannot be terminated at all.
A notice to terminate a land lease agreement which is valid until further notice may be issued at any time.
When the landlord terminates the land lease agreement, the tenant must be given a notice of termination in writing, and it must set out the date of termination of the tenancy. When it comes to terminating a land lease agreement for a fixed term, also the grounds for termination provided by the Tenancy Act must be included in the notice. A notice of termination can be replaced with a summons in which termination on a land lease agreement is sought.
If it’s not known who the tenant is, a notice of termination may be served on the tenant by publishing it in Official Journal. If there is a building in the land lease area, the termination must additionally be announced in building. The tenant is considered to be informed of the announcement on the date of publication of the journal.
When the tenant terminates the land lease agreement, the landlord must be given a notice of termination in writing. The notice of termination may also be given to a person who has been authorized to collect the rent, but not to a financial institution. When it comes to terminating a land lease agreement for a fixed term, also the grounds for termination provided by the Tenancy Act must be included in the notice. The notice of termination must be delivered in a verifiable manner. A notice of termination can also be served the same way as a summons.
If the notice of termination has not been served as defined in the law, the termination is ineffective.
If the term of the lease exceeds two years, the period of notice is three months. Otherwise, or when the term of the lease is valid until further notice, the notice period is two weeks, unless otherwise agreed.
Cancellation of the Land Lease Agreement
In addition, there are certain grounds which entitle the landlord or the tenant to cancel the lease agreement with immediate effect.
The Tenancy Act sets out certain grounds which entitle the landlord to cancel the lease agreement with immediate effect, as well as to damages. The right is not applicable to lease of a plot of land. Such grounds are:
assignment of the tenancy or grant of occupancy to the land contrary to a provision of the agreement or statute;
failure to pay the rent within six months of a reminder request by the landlord, when no deposit has been paid; and
material failure to care for maintenance of the land or property on such land, or use of the land in violation of the lease agreement, provided that such failure or breach is not remedied within the reasonable period of time granted to the tenant.
The right to issue notice to terminate the agreement expires, if the tenant remedies the failure or breach prior to termination. Notice of cancellation on any of the aforementioned grounds must be issued within a reasonable time of the landlord becoming aware of the relevant grounds for termination or before a statutory deadline; otherwise the right to issue notice to terminate the agreement expires.
When the land lease agreement is cancelled on abovementioned grounds, the tenancy expires immediately. The landlord has the right for compensation for the damages caused by the premature termination of the tenancy.
The Tenancy Act also sets out other grounds which entitle the landlord to cancel the lease agreement with immediate effect. The landlord has the right to cancel the land lease agreement for example when the tenant has other than insignificantly failed in the tenant’s duty to build.
The landlord also has the right to cancel the lease agreement in the cases of the tenant’s bankruptcy if the bankrupt's estate does not declare, within at least one month’s notice, hat it is willing to answer for the tenant’s obligations. The landlord has the right for compensation for the caused damages.
The tenant’s bankruptcy does not prevent one from serving notice of termination on an agreement.
The tenant has a right to cancel the lease agreement, if:
the landlord does not assign the leased landto the tenant on the agreed date;
orders of the authorities that have been effective when making the agreement prevent or hinder one from using theleased landto the contractual purpose and the landlord has not informed the tenant of this and tenant has not known about this;
at the moment of assignment the leased landis not in the agreed condition;
the parties have not contracted on the condition of the leased landbut the condition does not meet the tenant’s reasonable expectations considering the purpose of use of the leased land, the terms of the agreement and other circumstances,
the landlord who has committed to bring about or maintain certain condition of the leased land, fails to do so.
In the last three abovementioned cases the tenant’s right to cancel the land lease agreement presumes additionally that the tenant has exhorted the landlord to remedy the defectiveness within a reasonable time and the landlord has defaulted on this or the defectiveness cannot be remedied. If the landlord does not remedy the defectiveness by the deadline, the tenant may usually remedy the defectiveness at the landlord’s expense instead of cancelling the lease agreement. The tenant must ensure that the costs for the landlord shall remain reasonable.(The tenant does not have the right to remedy if the defectiveness is caused by incompleteness of a building located in the leased land or if the authorities have prohibited the use of the leased land or the property belonging to it.)
In addition, the tenant’s right to cancel the land lease agreement presumes that the grounds for the cancellation are significant for the tenant, considering the subject of the agreement, the purpose of use of the leased land, the agreed duration of the agreement and other circumstances.
The landlord may remedy the failure or breach before the tenant cancels the agreement, in which case the tenant no longer has the right to cancel the agreement.
The tenant’s right to cancel the lease agreement expires, if the landlord’s default or the defectiveness concerning the leased land is remedied prior to termination. The tenant’s right to cancel the lease agreement also expires if the notice of cancellation is not issued within a reasonable time of the tenant becoming aware of the relevant orders of the authorities.
When the tenant cancels the land lease agreement, the tenancy expires immediately.
When the lease agreement is cancelled on any of the aforementioned grounds, the tenant has a right to get redemption and compensation for the improvements the tenant has made. The tenant is obliged to compensate the damages in the leased land caused by the tenant. Also the landlord is obliged to compensate the damages caused to the tenant by a defect or defectiveness that results from the landlord’s negligence.
The tenant in entitled to a quittance from payment of rent or to a reasonable discount in the rent when the landlord’s neglect or the defectiveness in the leased land prevents or hinders the use of the leased land.
A contractual stipulation that limits the tenant’s rights to cancel and terminate the agreement is invalid.
A landlord or a tenant wishing to cancel the land lease agreement must give a notice of dissolution in writing. The grounds for cancellation must be included in the notice. It must set out the date of termination of the tenancy if the agreement is not going to terminate immediately. The notice of dissolution must be delivered in a verifiable manner. A notice of dissolution may be replaced with a summons.