In January, we hosted a webinar addressing the key innovations proposed under Book 7 with respect to sale, lease and construction agreements relating to immovable property. This article reflects the part of the presentation on lease agreements and highlights the most relevant changes included in the draft legislation.

Definition

Book 7 defines a lease agreement as a contract whereby the landlord undertakes to grant the tenant the temporary use and enjoyment of a good in exchange for a price.

The notion of ‘use’ covers all material acts that do not diminish the value of the good, as well as legal acts that do not alter its legal status. The ‘enjoyment of a good’ entitles the tenant to the good’s profits. A ‘good’ may be movable or immovable, tangible or intangible.

Book 7 also expressly confirms that a precarious occupation agreement does not qualify as a lease agreement. Such precarious occupation must, however, be justified by legitimate reasons in order to avoid circumvention of the law. Legitimate reasons are understood as contracts governing special circumstances, such as waiting situations.

The provisions of Book 7 only apply to common lease agreements, including office leases, warehouse leases, holiday homes and leases of movable goods. Residential, commercial and farm leases remain subject to regional legislation. Nevertheless, the common lease regime continues to play an important supplementary role, as regional regimes do not regulate all aspects of the tenant-landlord relationship.

State of premises

For the lease of an immovable good, Book 7 provides that the parties must draw up a detailed ingoing state of premises, by mutual agreement and at joint expense, no later than one month after delivery of the good. Under the current regime included in the old Civil Code, this must be done either while the leased premises are unoccupied or during the first month of occupation.

If significant changes are made to the good after the ingoing state of premises has been drawn up, the parties must, upon request of one of them, prepare an addendum to the state of premises, again by mutual agreement and at joint expense.

In addition, Book 7 introduces the possibility of a detailed outgoing state of premises, to be drawn up by mutual agreement and at joint expense if one of the parties so requests. While this principle is not included in the old Civil Code, it already exists under the Flemish and Brussels residential lease regimes.

These rules are mandatory and apply in the interest of both landlord and tenant.

Maintenance and repairs

As a general principle, repairs are borne by the landlord, unless these are imposed on the tenant by law or by contract. This follows from the landlord’s obligation of compliant delivery, which is a continuing obligation throughout the entire duration of the lease.

Minor maintenance

The tenant is responsible for cleaning the leased premises and carrying out minor maintenance as a prudent and reasonable person would do. While the old Civil Code included this under the notion of ‘normal and prudent use’, Book 7 clarifies the scope of this obligation.

Minor maintenance includes, among other things, preventing blockages in drains, replacing filters, batteries, light bulbs and fuses, and maintaining technical installations such as heat pumps, solar boilers and HVAC systems.

The legislator has provided for the possibility of drawing up a list of minor maintenance obligations applicable to leases of immovable goods. Given the technical and detailed nature of such list, this will be kept outside the Civil Code.

Minor repairs

Minor repairs are repairs for which it can be assumed that the damage is attributable to the tenant’s use of the premises or which are customarily borne by the tenant. The old Civil Code still refers to local custom and outdated examples, such as the repairs of fireplaces and the repairs to the plastering of walls up to a meter.

Here too, Book 7 allows for the adoption of a specific list outside the Civil Code of minor repairs applicable to immovable goods, which should help clarify the tenant’s obligations in practice.

Repairs resulting from misuse or lack of maintenance by the tenant

Repairs resulting from misuse or lack of maintenance by the tenant may also be charged to the tenant. This includes, for example, situations where the tenant fails to notify the landlord in due time of a defect, as a result of which additional damage occurs.

Normal wear and tear, age and force majeure

Repairs that are required solely due to normal wear and tear, age or force majeure remain excluded from the tenant’s responsibility. This rule reiterates the existing principle under the old Civil Code and aligns with the terminology used in Book 3 of the Civil Code.

Works performed by the tenant

In principle, and in the absence of the landlord’s consent, the tenant must return the leased premises at the end of the lease in the same condition as received.

The tenant may not carry out works that permanently alter the structure of the leased premises, such as installing new windows, creating additional rooms or adding non-removable structures.

However, the tenant may, without the landlord’s consent, carry out fit-out or alteration works that are in line with the intended use of the leased premises and that can be removed without damage at the end of the lease. Unless the landlord chooses to retain these works, the tenant must remove them upon termination of the lease.

Book 7 thus fills an important gap, as the current common lease regime does not contain specific rules on alterations by the tenant or on compensation, unlike the commercial and farm lease regimes.

The parties remain free to contractually regulate both the possibility for the tenant to carry out alterations and the compensation scheme at the end of the lease.

In the absence of contractual arrangements, Book 7 provides that the landlord must compensate the tenant in accordance with the rules on unjust enrichment (i.e. the added value, capped at the tenant’s actual cost) for:

  • Removable fixtures retained by the landlord; and
  • Non-removable fixtures that were permitted by the landlord.

Non-permitted, non-removable works are not subject to compensation.

Extrajudicial dissolution

Finally, Book 7 confirms that an express dissolution clause in a lease agreement relating to an immovable good is deemed unwritten. Termination of such lease agreements therefore requires prior judicial assessment.

This rule reflects existing Supreme Court case law and is now expressly characterized as mandatory for the benefit of both parties. Earlier drafts of Book 7 provided that this prohibition would solely apply for the benefit of the tenant, allowing the tenant to invoke an express dissolution clause to the detriment of the landlord. The legislator has since abandoned this approach and reinstated a general prohibition that applies for the benefit of both parties.

The prohibition applies exclusively to leases of immovable goods; leases of movable goods may still include express dissolution clauses.

On the contrary, the inclusion of a condition subsequent remains allowed. In that case, the termination of the parties’ obligations depends on the occurrence of a future and uncertain event, upon which the obligations lapse with retroactive effect.

Should you have any questions or wish to discuss how these changes may impact your practice, please contact one of our lawyers below.