Czech Supreme Court provides clarity in the matter of dual leases

The Supreme Court has abandoned the much-criticized doctrine of a legally vacant apartment, under which it was impossible to lawfully rent out an apartment which has already been let under a lease agreement.

In its judgment of 14 April 2021, file no. 31 Cdo 3679/2020, the Supreme Court dealt with the issue of how to proceed in the event that a landlord rents out for a second time an apartment already let under a first lease. Does the second lease agreement come into valid existence?

From the point of view of the current Civil Code, there are no legal ambiguities: both lease contracts are valid and any potential clashes will be resolved by other civil-law institutes, i.e., in particular, the liability for defects.

However, the situation was different in the case of lease contracts concluded under the previous legislation, i.e., before 2014. In those cases, the Supreme Court had for years held the view that if several lease contracts are concluded for the same property (so-called dual lease), the second of the contracts is null and void on grounds of the a priori impossibility of rendering the performance owed. This opinion of the Supreme Court was widely criticized by the professional community; in 2019, the Constitutional Court also weighed in on the issue, stating that this interpretation was not constitutional.

The Supreme Court has now reacted to the Constitutional Court’s findings by changing its opinion and ruling that a lease agreement is not invalid simply because the lessor made a thing available for use to the lessee which they previously rented out to another (or even the same) person for the same period of time. The legal interpretation has thus been unified and from now on this issue will be treated equally under the previous and current legislation.

Judgment 31 Cdo 3679/2020 by the Supreme Court of 14 April 2021

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