Terminating a rental lease as a tenant / owner

This page was last modified on 24-04-2017

Several possible scenarios exist:

  • Assignment of a lease
    A lease is said to be assigned when one of the parties to the lease agreement—the tenant or the landlord—transfers their rights under the lease agreement to a third party. In practice, lease assignments mainly occur in situations where a tenant who does not wish to continue the lease proposes a new tenant to the landlord to replace them as the party contracting with the latter.
    The scenario also covers the case in which a building that is leased by an owner (landlord) is sold.
    In this case, the lease is assigned automatically since the new owner is bound by a residential lease.
  • Termination of a lease
    Leases are terminated:
    • either by mutual consent;
    • or unilaterally, at the initiative of one of the parties, either in or out of court;
    • or after legal proceedings.

Who is concerned

These procedures apply to all holders of residential leases, except the following:

  • commercial leases;
  • administrative leases;
  • industrial leases;
  • leases for artisanal use or for the exercise of a liberal profession;
  • secondary residences;
  • premises that are separate from a main dwelling (such as a garage not attached to a house);
  • hotel rooms;
  • shelters for temporary accommodation of foreigners for the purpose of their reception and integration in Luxembourg;
  • furnished or unfurnished dwellings in special accommodation facilities (old people's homes, integrated centres for the elderly, geriatric centres, centres for the disabled, 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, a non-profit association or a foundation involved the field of housing.

How to proceed

Assignment and termination of a lease

In principle, a lease may be assigned by a tenant, unless such assignment is specifically excluded in the lease agreement.

In practice, the parties tend to use a different method:

  1. tenants who wish to leave the premises search for a new tenant, who they would then introduce to the owner;
  2. after that, a new lease agreement is signed between the landlord and the new tenant, with the same terms and conditions as the previous agreement, if applicable;
  3. the initial tenant and the landlord are then discharged of their obligations under the previous lease contract.

This practice spares the landlord having to pay agency fees and conducting many visits.

It allows tenants to be released early from a lease agreement without having to respect the originally agreed term.

Termination by mutual agreement

This is the preferred solution because of its simplicity, flexibility and the non-confrontational nature of the process. If both parties agree, they may freely deviate from the rules provided for by law and in the agreement.

The principle is that the parties who have signed the lease agreement can freely terminate the latter by mutual agreement. As soon as the parties are in agreement both on the principle and on the terms, they can freely set the deadline for the vacating of the premises, the date of the inventory check and for handing over of the keys, and where applicable, the presentation of a new tenant to sign a new lease to replace the one that was terminated, etc.

Although the law does not prescribe any particular form for termination by mutual agreement, it is advised that the terms of the agreement be put in writing and that the document be signed by all parties in order to avoid difficulties at a later stage. Indeed, with an oral agreement, one of the parties may fail to keep their word, and if that is the case it will be difficult to prove the content of an oral agreement.

Unilateral termination

In this scenario, one of the parties takes the initiative to terminate the agreement unilaterally. It is important to note that regardless of the duration of the lease, the latter may only be terminated by the landlord for serious and legitimate reasons, such as a personal need, a breach by the tenant of their obligations, or the need to perform major works such that it would be impossible for the tenant to remain in the rented premises.

In this case, certain rules must be observed in terms of form and notice:

Form

The lease should always be terminated by registered letter with acknowledgement of receipt.

Even if the landlord invokes personal reasons as grounds for termination, the law requires the observance of certain formal requirements (see below).

Notice

In most cases, leases are signed for a fixed term, with the possibility of renewal.

For the tenant, the stipulated term must in principle be observed and termination should occur on the day of expiry of the lease, failing which the lease will be renewed.

The notice period for termination a lease is 3 months, unless stipulated otherwise in the written lease when it provides for a period exceeding 3 months.

As an exception to the above, the period of notice is extended to 6 months when the landlord invokes personal need as the reason for termination of the lease.

Reasons for termination of a lease by a landlord

In addition to being required to observe the notice periods, landlords may only terminate a lease for legally admissible reasons, i.e., personal need, breach of obligations by the tenant, or other serious and legitimate reasons that may preclude renewal.

Outgoing inventory check

As a general rule, an outgoing inventory check is carried out when the tenant leaves the dwelling and returns the keys to the landlord (technically, the tenant is supposed to keep paying rent until the keys are returned to the landlord).

In principle—unless stipulated otherwise in the lease agreement—the tenant is required to return the rented premises in the same condition they were in at the start of the tenancy.

Damage caused as a result of normal use, wear and tear or dilapidation is not considered as rental damage (e.g., small holes in the wall due to nails used to hang paintings), and the tenant cannot be held responsible for such damage. Therefore, there is no need to mention such damage in an outgoing inventory check.

There is no legal obligation to perform an outgoing inventory check.

A sample inventory form can be found in the publication entitled, "Bail à loyer - La nouvelle législation en matière de bail à usage d'habitation" (Rental leases - New legislation on residential leases).

Eviction of tenants and legal termination

At the end of the notice period for termination of the lease, the tenant usually leaves the dwelling. However, if for any reason, the tenant refuses to voluntarily leave the dwelling after the end of the notice period, the landlord is obliged to file a request with a Justice of the Peace (juge de paix) to have the tenant vacate the dwelling. To that end, the magistrate sets a time limit for the tenant to vacate the premises.

However, a tenant who has been ordered to vacate may still apply to the Justice of the Peace for a stay. An application for stay is filed as a simple request with the clerk of the court of the Magistrates' Court. The parties will be summoned by the clerk of the court for the first effective hearing. The judge's decision on the application for a stay cannot be appealed.

The stay may not exceed three months. However, it may be extended, but no more than two times, each time for no more than three months. But stays are not automatically granted to all tenants. Only tenants who appear to deserve this favour and can prove that they have taken useful and extensive measures to find a new home are granted a stay.

If the time allowed by the judge to vacate the premises is more than 15 days, the application for stay must be filed no later than 3 days before the expiry of that period, failing which the right to file the application will lapse. If a stay is in progress, the application for an extension of the stay must be filed no later than 3 days before the expiry of the stay, failing which the right to file the application will lapse. The Justice of the Peace will immediately issue a ruling on the application. The application will have a suspensory effect.

If the tenant has appealed against the decision to vacate the premises and the appeal is declared to be without merit or inadmissible or invalid, the tenant may not file another application for a stay, regardless of the period set by the appellate judge for the party ordered to vacate. An application for stay or extension of a stay will be deemed inadmissible if more than one year has elapsed between the date the judicial proceedings commenced and the expiry of the period for vacating the premises established by the judgement extending the order, or in the order granting a previous stay.

Special case: eviction for reasons of owner's/landlord's personal needs

If, at the end of a fixed-term lease or an indefinite-term lease, a landlord invokes 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 landlord'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 Justice of the Peace to judge the validity of the grounds for termination.

This is why a letter of termination must:

  • be in written form;
  • contain clear and unequivocal reasons;
  • be accompanied, if necessary, by supporting documents (e.g., a copy of the plans for the conversion of the dwelling in question, if the owner wishes to set up a business on the premises; evidence that the person in need of the dwelling 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 termination of the lease has expired, the tenant must vacate the premises, unless they object to doing so by filing a request with a Justice of the Peace for an extension of the notice period within three months of receiving the letter of termination or, failing that, by filing a request for a stay of execution of the decision to vacate. The extension of the notice period may under no circumstances exceed 12 months from the date of expiry of the initial 6-month notice period for termination. As such, the tenant is entitled to up to 18 months' notice if they can claim a real and serious reason. But in that case, the tenant may no longer seek a stay.

Special case: eviction for sale of a rented dwelling

The purchaser of a dwelling that is leased in whole or in part may not evict a tenant who was the holder of a lease before the acquisition date unless the tenant fails to fulfil their contractual obligations, or if the new purchaser can provide other serious and legitimate reasons (the mere transfer of ownership of the rented dwelling is, however, not a serious and legitimate reason).

The purchaser of a rented dwelling who wishes to occupy the dwelling themselves—or to have the dwelling occupied by a relative by blood or marriage up to the third degree inclusively—must send the tenant, within 3 months of the purchase of the dwelling, a registered letter terminating the lease agreement with 6 months' notice.

Moreover, the landlord'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 Justice of the Peace to judge the validity of the grounds for termination.

This is why a letter of termination must:

  • be in written form;
  • contain clear and unequivocal reasons;
  • be accompanied, if necessary, by supporting documents (e.g., the notarial deed of acquisition of the building; a copy of the plans for the conversion of the dwelling in question, if the owner wishes to set up a business on the premises; evidence that the person who needs the dwelling 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 termination of the lease has expired, the tenant must vacate the premises, unless they object to doing so by filing a request with a Justice of the Peace for an extension of the notice period within three months of receiving the letter of termination or, failing that, by filing a request for a stay of execution of the decision to vacate. The dwelling must be vacated by the tenant no later than 12 months from the date that the letter terminating the lease was sent.

Special case: death of tenant or owner

In the event of the death of the tenant, the lease shall continue indefinitely in favour of the spouse who had lived with the tenant—or the partner who had filed a declaration of partnership with the tenant, or had lived in partnership with the tenant—or in favour of the descendants, ascendants or domestic partner who had been living in the same household as the tenant for at least 6 months on the date of death, and who had declared their joint domicile in the dwelling during that 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.

Legal termination

In the event of serious difficulties between a landlord and a tenant, the parties have the right to refer the dispute to the courts to have the lease terminated and, if necessary, to take binding measures, such as the eviction of the tenant.

Who to contact

 
Luxembourg