Terminating or assigning a lease agreement
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Summary:
The termination of a lease agreement marks the end of the contract between the owner and tenant. In contrast, when a lease is assigned to another party, the contract continues but with a change of tenant or owner.
As a tenant or owner-lessor (hereinafter 'owner'), you have the option to:
- transfer a lease agreement; or
- terminate a lease agreement.
In the event of transfer of a lease agreement, the tenant or the owner transfers their rights on the lease agreement to another person.
In practice, the transfer of a lease agreement mainly occurs when the tenant does not wish to continue the lease and proposes a new tenant to the owner with a view to replacing the tenant as the co-contractor.
Occasionally, the owner will put the rental property up for sale and this will automatically result in the assignment of the lease to a new owner.
In the event of the termination of a lease agreement, the tenant and/or the owner will terminate the contract through the following procedures:
- by mutual agreement; or
- unilaterally, at the initiative of one of the parties, either in or out of court;
- following legal proceedings.
When a tenant leaves the rented premises, an outgoing inventory check will generally be carried out.
Who is concerned
Any natural or legal person who holds a residential lease agreement.
Excluded properties
The type of lease referred to above – i.e. for the rental of a residential property (dwelling) – may not be used for the rental of the following types of properties:
- properties used for:
- commercial activities;
- administrative activities;
- industrial activities;
- craft activities; or
- the practice of a liberal profession;
- secondary residences;
- premises that belong to but are separate from a main residential property (dwelling) – such as a garage that is not attached to a house;
- hotel rooms;
- shelters for temporary accommodation of applicants for international protection, refugees, etc.;
- furnished or unfurnished dwellings in special accommodation facilities (old people's homes, integrated centres for the elderly, etc.);
- furnished or unfurnished dwellings made available to natural persons as part of a social assistance programme implemented by a commune, an association of communes, etc.
How to proceed
Assignment of a lease agreement
In principle, the tenant may decide to transfer the lease agreement unless there is a non-assignment clause in the lease agreement.
In practice, the parties use this method in 3 stages:
- a tenant who wishes to leave the premises will search for a new tenant, who they would then introduce to the owner; and
- a new lease agreement is signed between the owner and the new tenant, with the same terms and conditions as the previous agreement, if applicable; and
- the initial tenant and the owner are then discharged of their obligations under the previous lease contract.
This practice allows:
- the owner to avoid having to pay agency fees and conduct numerous visits;
- the tenant to be released from the lease agreement in advance without having to fulfil the term originally agreed.
In the event of the sale of the dwelling
The owner may put their rented property up for sale, which will also lead to the transfer of the lease.
If the lease agreement has been in place for at least 18 years, the owner must first offer their property for sale to the tenant, except in the event of:
- sale by public auction; or
- transfer to a relative by blood or marriage up to the third degree; or
- free-of-charge assignment.
If the owner does not comply with these conditions, the affected tenant may claim damages-interest from the seller. This amount cannot be less than one year of rent.
The procedure is as follows:
- the owner sends the sales offer to the tenant by registered letter.
In this offer, the owner must inform the tenant that they have the right to make a counter-offer. - the tenant has one month to make any counter-offer. Failure to respond shall constitute a refusal;
- if the tenant has made a mortgage application at a financial institution in Luxembourg, this deadline shall be extended by one month;
- the premises can only be sold to a third party at price higher than the price offered by the tenant.
Termination of a lease agreement
Termination by mutual agreement
The parties shall terminate the lease agreement by mutual agreement. This is the preferred solution because of its simplicity, flexibility and the non-confrontational nature of the process.
As such, the parties are free to:
- arrange:
- the time frame to free the premises;
- the date of the outgoing inventory check;
- the date of the handover of the keys;
- the introduction of a new tenant to sign a new lease agreement, etc.
In order to avoid any subsequent issues, the parties are advised to put the terms and conditions in writing and to sign the document.
Joint tenancy
In the event of a joint tenancy, if all the joint tenants terminate the lease at the same time, they shall:
- sign the letter of notice; and
- send it to the owner by registered letter with acknowledgement of receipt; and
- give the owner at least 3 months' notice.
In the event that at least half of the joint tenants, who are signatories of the lease, have given notice within a 3-month period, the owner may terminate the lease agreement. To do so, the owner must:
- comply with a one-month deadline from the date of notification of the last notice by the joint tenant in question;
- give 3-months' notice to the remaining joint tenants;
- send the letter of termination, by registered letter with acknowledgement of receipt, to each joint tenant.
Unilateral termination
By the tenant
In this scenario, the tenant takes the initiative to terminate the agreement unilaterally.
They must comply with the terms set out in the lease agreement. The termination must take place on the expiry date of the lease, failing which the lease will be renewed.
If a joint tenant wishes to free themselves of their obligations before the term of the lease, they must:
- give the owner and the other joint tenants 3 months' notice; and
- send the notice of termination to the owner by registered letter with acknowledgement of receipt; and
- find another joint tenant to replace them before the expiry of their notice period or, failing that, demonstrate that they have actively attempted to find a new joint tenant (e.g. by publishing a 'tenant wanted' ad on at least 2 media outlets that publish classified ads, with a section featuring ads for the Luxembourg real estate market, within 15 days of the start of their notice period).
By the owner
The owner may terminate the lease, irrespective of its term, on the grounds of serious, legitimate and compelling reasons, including:
- personal needs; or
- the tenant's breach of their obligations; or
- major works, which would make it impossible to accommodate the tenant in the leased premises.
In this case, certain rules must be observed in terms of form and notice:
Form
In principle, the lease should always be terminated by registered letter with acknowledgement of receipt.
Even if the owner invokes personal needs as grounds for termination, the law requires the observance of certain formal requirements (see below: 'Special case: eviction due to the owner's personal needs').
Notice
In most cases, leases are signed for a fixed term, with the possibility of renewal.
The notice period for the termination of a lease is 3 months, unless there is a clause that provides for a period exceeding 3 months.
When personal needs is the reason given by the owner for the termination of the agreement, the notice period shall be 6 months.
Eviction of the tenant and legal termination
At the end of the notice period, the tenant usually vacates the premises.
If the tenant refuses to leave the premises voluntarily after the end of the notice period, the following procedure must be followed:
- the owner shall file, with the magistrate having territorial jurisdiction, an application to order the tenant to vacate the premises;
- the magistrate shall set a time limit for the tenant to vacate the premises;
- the tenant who is ordered to leave may:
- appeal the decision to vacate the premises before the district court having territorial jurisdiction; or
- apply for a suspension of eviction before the magistrate.
Applying for a suspension of eviction
A suspension of eviction application must be filed with the clerk of the magistrate's court having territorial jurisdiction.
In order to be admissible, the tenant must file their application for a suspension/extension of suspension with the magistrate at the latest 3 days before the expiry of the deadline.
This is valid for:
- time limits to vacate the premises that exceed 15 days; or
- an ongoing suspension.
The maximum suspension that may be granted to the tenant is 9 months. Each suspension may not exceed 3 months; it may be extended no more than twice, each time for a maximum period of 3 months.
Only tenants who can prove that they have undertaken appropriate measures to find a new premises and deserve favourable treatment shall be granted a suspension.
All ongoing actions shall be suspended while the magistrate deliberates on the case.
An application for a suspension or an extension of the suspension shall be deemed inadmissible if more than one year has elapsed between the date the judicial proceedings for termination of the lease commenced and the expiry of the period for vacating the premises.
Special case: eviction due to the owner's personal needs
If, in order to justify the termination of the lease agreement, the owner invokes a personal need (for themselves or a member of their family up to the third degree), they are required to observe a 6-month notice period for the termination of the lease, instead of a 3-month notice period.
In that scenario, the owner's letter of termination is subject to certain formal requirements. It must be prepared in such a way as to enable both the tenant and the magistrate to judge the validity of the grounds for termination.
Thus, the letter of termination must:
- be in written form;
- contain clear and unambiguous reasons;
- include, where applicable, supporting documents, such as:
- a copy of the renovation plans of the premises in question, if the owner wishes to set up a business on the premises;
- proof that the person who needs the premises is a member of the owner's family up to the third degree;
- be sent to the tenant by registered post with acknowledgement of receipt;
- contain the text of paragraph (3) of Article 12 of the Law of 21 September 2006 on residential leases, failing which the letter will be deemed invalid.
Once the 6-month notice period for the termination of the lease has expired, the tenant must vacate the premises, unless they object to doing so by filing:
- an application with a magistrate for an extension of the notice period within 3 months of receipt of the letter of termination; or
- an application for a stay of execution of the decision to vacate the premises after the 6-month notice.
As such, the tenant is entitled to up to 18 months' notice on condition there is an actual and serious reason.
Special case: eviction for sale of a rented premises
The transfer of ownership of a rented property on its own is, however, not a serious and legitimate reason to evict the tenant.
The new owner of a premises, which is already rented in part or in whole, may only evict the tenant, who is the holder of a lease agreement before the purchase date of the property in the following cases:
- they can prove that the tenant does fulfil their contractual obligations; or
- other legitimate and serious reasons exist.
If the new owner wishes to occupy the premises themselves or to have the dwelling occupied by a relative by blood or marriage up to the third degree, they must send the tenant, within 3 months of the purchase of the premises, a registered letter terminating the lease agreement with 6 months' notice.
The new owner's letter of termination must be drafted in such a way as to enable the tenant and magistrate to judge the validity of the grounds for termination.
For more information on the letter of termination and its follow up, please check the paragraph above 'Special case: eviction due to the owner's personal needs'
The premises must be vacated by the tenant no later than 12 months from the date on which the letter of termination of the lease was sent.
Special case: death of tenant or owner
In the event of the death of the tenant, the lease shall continue for an indefinite period for:
- the joint tenant who cohabited with the tenant; or
- the partner who had filed a declaration of civil partnership agreement with the tenant; or
- the spouse who lived together with the tenant as a couple; or
- the descendants, ascendants or domestic partner, who:
- had been living in the same household together with the tenant for at least 6 months on the date of death; and
- had declared the premises as their place of residence at the commune during this period.
If no one meets the above-mentioned conditions, the lease is automatically terminated on the death of the tenant.
In the event of the death of the owner, the lease shall continue with the owner's heirs.
Who to contact
-
Magistrate's Court
- Address:
- Luxembourg
-
Magistrate's Court Magistrate's Court of Diekirch
- Address:
-
8-10, place Joseph Bech
L-9211
Diekirch
Luxembourg
B.P. 66, L-9201 Diekirch
- Phone:
- (+352) 80 88 53 1
- Fax:
- (+352) 80 41 90
-
Magistrate's Court Magistrate's Court of Esch-sur-Alzette
- Address:
- Place Norbert Metz L-4006 Esch-sur-Alzette Luxembourg
- Phone:
- (+352) 530 529
- Fax:
- (+352) 530 529 304
-
Magistrate's Court Magistrate's Court of Luxembourg
- Address:
- Cité judiciaire - Plateau du Saint-Esprit - Building JP L-2080 Luxembourg
- Phone:
- (+352) 47 59 81 1
- Fax:
- (+352) 46 54 34
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Related procedures and links
Procedures
Links
Further information
-
Brochure "Bail à loyer - La nouvelle législation en matière de bail à usage d’habitation"
sur le site du ministère du Logement et de l'Aménagement du territoire
-
Brochure "Savoir loger – Guide du locataire"
publié par Caritas Luxembourg sur issuu
Legal references
- Code civil
-
Loi modifiée du 21 septembre 2006
sur le bail à usage d'habitation et modifiant certaines dispositions du Code civil
-
Loi du 5 août 2015
modifiant la loi modifiée du 21 septembre 2006 sur le bail à usage d'habitation et modifiant certaines dispositions du Code civil
