The Supreme Court of the Czech Republic had to address the question of the extent to which rights and obligations from a lease relation pass to the new owner of the rental property under current law.
Author: Matěj Beneš, legal assistant
The general statutory rule on the passage of rights and obligations is found in Sec. 2221 of the Civil Code (Act No. 89/2012 Coll.) according to which the rights and obligations from leases pass to the acquirer. Sec. 2221 (2) adds that these rights and obligations are binding for the acquirer only to the extent that the acquirer was cognizant of them. A provision of the same content was also found in the preceding statute (since replaced by the Civil Code) – namely, in Sec. 680 (2) of Act No. 40/1964 Coll.; consequently, the Supreme Court decided in this case to follow the previously established practice of the courts (cf. Supreme Court judgment 26 Cdo 652/2013 of 29 May 2013).
The court ruled that “both these provisions govern the special case of succession where the lessor’s rights and obligations under the lease pass to the acquirer by force of law if and when the event occurs with which the law associates the aforementioned consequence”. The acquirer enters into the existing (original) lease relationships, including all their substantive attributes (such as the subject of the lease, the statutory obligations under the lease relationship, or the obligations entered into in the lease agreement) – with the exception of rights and obligations which are subject to a separate legal treatment because of the legal grounds on which they are based. An example for the latter would be financial claims which came into existence during the existence of the original lease relationship.
The rationale behind this legal succession is to ensure that a certain continuity of the lease is preserved on the part of the lessor if the rental property changes ownership. Because of this, liabilities (if any) of the acquirer’s legal predecessor which go beyond the scope of the lease relationship do not pass to the acquirer – only rights and obligations which are characteristic for the lease relation. The legal succession does however encompass the entire breadth of that relationship: essential components such as the manner in which rent is being calculated (or otherwise determined), recurring components (such as the due date for rent), but also arbitrary ad hoc components. One of the rights which passes to the new lessor is the right to receive rent, and with it the corresponding obligation of the lessee to henceforth pay rent to the new lessor.
However, if the original lessor e.g. made an arrangement with the lessee under which rent should be “paid” in the form of a successive set-off by instalments, then such an arrangement would not qualify as typical for lease relationships and would thus not pass to the new lessor.
Source:
Supreme Court judgment 26 Cdo 1534/2022 of 8 February 2023