Termination of a Lease of Business Premises
Expiry of Term
A fixed-term lease agreement expires on the set date. The agreement is binding on the parties during the agreed term. A fixed-term agreement cannot be terminated at will, however, it may be rescinded in accordance with the grounds for rescission mentioned below.
Notice of Termination
A lease agreement that is valid until further notice will terminate upon expiry of the notice period following a notice of termination issued by either party. The parties are free to agree upon the notice period. In the absence of an agreement, the notice period is one month if the notice is issued by the tenant, and three months if the notice is issued by the landlord. The calculation of the notice period commences as of the last date of the calendar month during which the termination was performed, unless otherwise agreed or provided by law.
The notice of termination must be made in writing, and delivered to the other party in a verifiable manner. A notice of termination issued by the landlord must state the time of termination of the lease agreement and grounds for termination. The termination of the lease is invalid, if it has not been carried out in accordance with the law.
Upon the tenant's request, a court may declare the landlord’s notice to terminate the lease invalid, if:
the reason for termination is an adjustment of the rent or a contractual term regarding determination of the rent, and the requested rent or term regarding determination of the rent is unreasonable; or
the termination is unreasonable when taking into consideration the tenant’s circumstances, and there is no justifiable reason for terminating the lease.
If termination of the lease is deemed to be contrary to good business practice, the court may order the landlord to pay damages to the tenant, for instance for loss of customers where the subsequent tenant has commenced the practice of similar business activities in the premises. This is, however, unusual as regards agreements between companies.
Rescission
The landlord is entitled to rescind the lease agreement with immediate effect in certain circumstances, for instance, if the tenant fails to pay the rent, uses the premises for other than agreed purposes, or neglects proper care for the premises. The landlord has the right to rescind the agreement also, if the tenant has transferred the lease agreement or granted possession of the premises to a third party without the landlord’s consent. The landlord’s right is, however, subject to the tenant's actions being of greater than minor significance, and the landlord claiming such circumstances within reasonable time after becoming aware thereof. Usually, the landlord is required to issue to the tenant a written caution prior to such rescission. However, written caution is not required if the rescission is based on failure to pay the rent.
The tenant is entitled rescind the lease agreement if, for instance, use of the premises apparently risks the health of the tenant or the tenant's employees. The tenant's right to rescind the agreement is conditional to the matter being of greater than minor significance.
The notice to rescind the lease agreement must be made in writing and delivered in a verifiable manner. The notice must state the grounds for rescission, and time for termination of the agreement where the rescission is desired to enter into force later than immediately after receipt of the notice of rescission by the other party.
Both the landlord and the tenant are, subject to certain conditions, entitled to damages incurred due to rescission of the lease agreement.