Civil Law – Unilateral termination of a rental contract in order for the landlord to live in the property
Unilateral termination of rental contracts;
Protection of tenants;
Retroactive efficacy of laws;
Principle of the protection of trust (legal certainty).
RULING No. 360/15
9 of July of 2015
A norm in the Urban Rental Regime (RAU) reduced the protection available to domestic tenants. Previously, landlords were unable to unilaterally terminate rental contracts if the tenant of a property used for his/her own, or his/her children’s, accommodation was over a certain age limit, was an invalid or otherwise incapable of working, or had rented the property for more than thirty years on the date on which Law no. 31/2012 entered into force. The challenged norm effectively removed the latter limitation on the landlord’s right to unilaterally terminate.
The Court upheld its own jurisprudence, under which it had already recognised the right of long-term tenants to protection of the position of trust (certainty) derived from the fact that for many years there had been legislation recognising the tenant’s right to protection in such situations. The earlier legislation sheltered tenants from the possibility of suddenly being forcibly uprooted, and preserved the place they saw as home, which is a core element in any life plan. The Constitutional Court took the view that there were no public-interest reasons which, when weighed against the opposing interests, would have justified discontinuing the legislative behaviour which generated that position of trust. The Court therefore concluded that the norm violated the principles of legal certainty and the protection of legitimate trust included in the principle of a democratic state based on the rule of law, and declared it unconstitutional.
The Public Prosecutors’ Office was required to bring this appeal before the Constitutional Court, because the court a quo refused to apply a norm contained in a 2012 Law that revised the Regime governing Urban Rentals (RAU), on the grounds that the norm was unconstitutional because it was immediately applicable to cases in which, before the law was revised, landlords had brought lawsuits asking the court to confirm the termination of rental contracts. The particular contract in question involved the rental of a property for the tenant to live in, and was entered into before the RAU itself entered into force. The legislation applicable when the landlord brought the suit to terminate the contract would have prevented that termination. At issue was thus one of the facts with the ability to preclude a landlord’s right to terminate – in this case, the fact that the tenant had occupied the property for thirty years or more.
The court a quo interpreted the new regulation brought in as a result of the textual changes made by the 2012 Law (an interpretation which the Constitutional Court was not asked to review) to mean that a tenant who had lived in a property for thirty years or more was no longer able to invoke that circumstance as a fact which would preclude the landlord’s right to unilaterally terminate the rental contract in an eviction action pending at the time when the new legislative act entered into force.
The Court noted that with regard to rentals for housing purposes, the Civil Code used to establish a special provision under which, as a rule, landlords did not possess the right to terminate rental contracts. Such contracts were deemed automatically renewed unless they were terminated by the tenant in one of the manners provided for in the Code. This normative solution dated back to the housing crisis that followed World War One, and was originally intended to be transitional, inasmuch as it resulted in a clear divergence from the principle of the freedom of contract. However, it ended up being successively maintained, until the Civil Code finally adopted it as definitive.
The principle that rental contracts were obligatorily or automatically extended was intended to make the tenant’s legal position a stable one, and to provide his/her home with lasting protection. Termination ad nutum was a right that pertained solely to tenants. However, the original version of the Civil Code did then allow landlords to terminate on certain grounds, one of which was the existence of conflicting positions between two rights with the same nature – i.e. the tenant’s right to housing and the landlord’s right to housing, when the landlord needed the property to live in or build his/her own residence on.
While the original version of the RAU, which was approved by a 1990 Executive Law, continued to make the renewal of rentals for housing purposes automatic and obligatory (except in the case of contracts that stipulated a limited duration), it allowed landlords to unilaterally terminate if they needed the property for their own accommodation, albeit subject to certain limitations. Of particular significance to the present case is that the RAU increased the minimum limit beyond which tenants who had lived in the same rented property could not see their contract terminated by the landlord on the grounds that he/she needed to live in it, from twenty to thirty years.
The Constitutional Court was called on to review that norm on several occasions, initially finding it materially unconstitutional due to a violation of the principle of the democratic state based on the rule of law, when interpreted such as to encompass cases in which the minimum limit had already been reached before the law was changed, and subsequently declaring its unconstitutionality with generally binding force on the grounds that it was organically unconstitutional.
Following this declaration of unconstitutionality, an Executive Law approved in the year 2000 restored the thirty-year limit, albeit retaining the twenty-year limit for actions to terminate and evict that had been brought under the previous law.
The 2012 Law whose norm was brought before the Court in the present case restricted the protection available to domestic tenants with old rental contracts to those above a certain age, invalids and other persons who are incapable of working, and did away with the limitation that prevented landlords from unilaterally terminating rentals which had already lasted for a certain number of years.
The court a quo considered that making the same regime apply to both new and old contracts, without a transitional norm designed to protect the legal position of long-term tenants who had already acquired the right to remain in their homes under the previous regime, was unconstitutional, first and foremost because it violated the principles of legal certainty and the protection of legitimate trust.
The Constitutional Court fully concurred with the lower court’s finding. It said that a tenant who had lived in his/her rented home for the twenty years which the previous law said precluded the landlord’s right to unilaterally terminate the contract and evict the tenant because the landlord or his/her children needed to live in the property, had acquired the right to continue to occupy the home without running the risk of the landlord invoking his/her own need for accommodation. This passage of time means that the tenant’s right to remain in the rented property is anchored in the postulate of the legal certainty derived from the principle of the state based on the rule of law.
The Court found that the norm before it violated the minimum degree of certainty and security that citizens must be able to attach to the legal system of a state in which the law is supreme, and therefore declared it unconstitutional.
See Rulings nos. 330/90 (13-12-1990); 259/98 (05-03-1998); 682/99 (21-12-1999); 201/2007 (21-03-2007); and 297/2015 (02-06-2015).
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