Landlords, be aware of tenant’s pre-emption right!
When a landlord wishes to conclude a new lease agreement for the premises previously rented to a tenant, it should consider the latter’s right to enter into such agreement with priority. Only a tenant who fully complied with its obligations derived from the previous lease agreement may exercise such pre-emption right. Moreover, tenants who expressly waive to the legal preemptive right are not entitled to make use of such right anymore. Tenants may exercise their pre-emption right to lease the premises before the expiry of the previous lease agreements, as well as after the termination of the lease agreements. The period after which the right may be exercised depends on the duration of the previous lease agreement. For example, if the previous lease agreement was concluded for a period of more than one year, the tenant may exercise the pre-emption right within a maximum period of 3 months from the termination of the previous lease agreement.
There are two scenarios in which the tenant may exercise the pre-emption right to conclude the new lease agreement, as follows:
- The landlord makes a direct offer to the tenant. The offer should contain all the essential terms and conditions of the new lease agreement. If the tenant accepts the offer, a new lease agreement will be concluded between the tenant and the landlord. In such a case, the tenant should consign for the landlord at least the rent corresponding to the first payment due under the lease agreement.
If the tenant fails to accept the offer within 30 days, landlord’soffer will be considered rejected. In this case, the latter may freely conclude the lease agreement with a third party under the same terms and conditions notified to the tenant. In case the landlord will change the terms and conditions of the offer submitted to the tenant, it should notify again the tenant on the new terms and conditions.
- The landlord concludes a lease agreement with a third party subject to the condition precedent that the former tenant does not exercise its pre-emption right within 30 days from the moment when the landlord notifies to the latter the terms and conditions of the agreement concluded with the third party. If the tenant accepts the terms and conditions notified, the agreement is concluded between the tenant and the landlord, while the agreement with the third party ceases retroactively.
The rules above apply only if the parties have not agreed differently on the pre-emption procedure in their initial lease agreement. As failure of the landlord to observe tenant’s pre-emption right to conclude a new lease agreement may trigger claims for damages against the landlord, it is highly advisable for the latter to observe tenant’s pre-emption right.
