Claims from Unjust Enrichment in the Event of Early Termination of a Lease Relationship

Lease agreements concluded for a fixed term often include provisions obligating the tenant to pay the landlord a portion of the rent in advance for the entire anticipated lease period. This serves as a form of guarantee, signaling the tenant's commitment to maintaining the lease relationship with the landlord for a certain period. However, what happens if the lease relationship ends earlier than initially anticipated, particularly when this termination occurs after the ownership of the leased property has been transferred from the original landlord to their legal successor?

The question arises as to who is obligated to return the unjust enrichment to the tenant, representing the portion of the prepaid rent corresponding to the period from the termination of the lease relationship until the originally agreed lease term. Is it the original landlord who received the rent payment, or their legal successor, i.e., the acquirer of the leased property?

According to § 680 (2) of the Civil Code, when ownership of a leased object changes, the acquirer assumes the legal position of the landlord, and the tenant is entitled to discharge their obligations to the former owner only once the change has been notified to or demonstrated by the acquirer.

Over the past 18 years, Czech judicial practice has undergone a significant shift in its interpretation of which rights and obligations under a lease agreement are subject to § 680(2) of the Civil Code. Initially, a restrictive interpretation prevailed[1], whereby only those rights and obligations directly connected to the essential components of the lease agreement were transferred to the new landlord. However, this view was later criticized by the Constitutional Court of the Czech Republic, which, in its decision (ref. no. II. ÚS 3292/09), stated that § 680(2) of the Civil Code grants leases unilateral real rights effects with an emphasis on tenant protection. Courts should therefore prioritize safeguarding the tenant's legal position by recognizing their rights under the lease agreement. According to the Constitutional Court, only those rights and obligations with a separate legal regime due to their specific legal grounds or those that became independent during the original landlord's tenure (e.g., a claim for already due rent)[2] are excluded from legal succession. The Supreme Court of the Czech Republic, in its more recent case law[3] has repeatedly addressed the issue of security deposits.It has consistently held that tenants are entitled to demand the return of the deposit from the new landlord, even if it was paid to the predecessor. In its decision (ref. no. 26 Cdo 652/2013), the Supreme Court concluded that legal succession encompasses not only the essential terms forming the content of the lease relationship but also regular elements (e.g., the place and time of rent payments) and ancillary components.

The prevailing view of Slovak legal doctrine aligns with this interpretation, holding that a change in the owner of the leased property results in the new owner stepping into the legal position of the landlord by operation of law, retaining all rights and obligations agreed between the tenant and the original landlord. This includes obligations undertaken by the original owner for specific reasons, such as a personal relationship with the tenant[4].

The key to determining who is obligated to return the unjust enrichment to the tenant after the lease relationship ends lies in identifying when the claim for the return of the unjust enrichment arises. We believe that this claim arises at the moment the lease relationship is terminated, as only then is it clear whether the prepaid rent will be used by the tenant.

If we were to accept the argument that the debtor is the original landlord, an absurd situation would arise where the new landlord could claim the full rent amount from the tenant, even though it was already paid to the original landlord. The new and original landlords can settle claims related to the lease relationship within the framework of the agreement transferring ownership of the leased property. Furthermore, after the ownership transfer, the original landlord no longer has control over the duration of the lease relationship. The tenant’s claim against the original landlord would, in this case, be entirely dependent on circumstances between the new landlord and the tenant, which would be clearly unjust and inconsistent with a reasonable arrangement of relationships among the parties to this legal relationship.

For the reasons outlined above, the only rational conclusion is that claims arising from unjust enrichment should be settled between the current parties to the lease relationship, i.e., the tenant and the new landlord.

The reference: https://www.epravo.sk/top/clanky/naroky-z-bezdvodneho-obohatenia-pri-predcasnom-skonceni-najomneho-vztahu-4586.html

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[1] See, for example, decisions of the Supreme Court of the Czech Republic, file no. 26 Cdo 493/2001 and 26 Cdo 866/2002.
[2] See the finding of the Constitutional Court of the Czech Republic, file no. II. ÚS 3292/09.
[3] See, for example, the judgment of the Supreme Court of the Czech Republic, file no. 26 Cdo 652/2013, and the judgment of the Supreme Court of the Czech Republic, file no. 29 Cdo 4627/2010.
[4] See Števček, M. et al. Civil Code II. Commentary. C. H. Beck 2015, p. 2351.