Early return of the rental property does not release the tenant from the duty to pay the rent. The tenant can be released if he proposes a reasonable, solvent replacement tenant to the landlord
Principle and exception
The parties to the lease agreement must comply with the notice period and termination dates. Therefore, rent must be paid even if the tenant returns the rental property prematurely and no longer uses it. This corresponds to the principle of pacta sunt servanda.
An exception to this principle was created with Article 264 CO. The tenant is relieved of their obligations towards the landlord if they propose a reasonable and financially capable new tenant who is willing to take over the lease under the same conditions.
Thus, three conditions must be cumulatively met:
- The replacement tenant must be reasonable.
- The replacement tenant must be solvent.
- The replacement tenant must be willing to assume the lease under the same conditions.
Tenant’s declaration
A notification from the tenant to the landlord stating that they are “terminating” the lease agreement in advance on a specific date and will seek a replacement tenant from that date onwards is considered a notification of early return under art. 264 CO. It is also sufficient to communicate that the rental property will be returned prematurely without stating the intention to seek a replacement tenant, as long as it is clear that it is not a termination.
If the tenant does not make it clear that it is an early return of the rental property, for example, by only stating that they are terminating the lease agreement, this communication is considered a termination for the next possible termination date (art. 266a para. 2 CO).
Reasonable replacement tenant
Whether a replacement tenant is reasonable depends on the circumstances of each individual case. In general, only objective criteria may be considered in assessing reasonableness. The existing tenancy relationship with the tenant is crucial.
Vague concerns, antipathy, or a fundamentally negative attitude towards a particular group of people are not sufficient reasons to deem a replacement tenant unreasonable (BGE 119 II 36, E.3.d).
Reasons for unreasonableness may include:
- Hostility between the landlord and the applicant
- Business rivalry or competition between the applicant and the landlord or other tenants in the property
- Potential inconvenience to other tenants
- Well-founded doubts about the applicant’s creditworthiness
- If the applicant intends to use the rental property differently than before (different business)
- If the applicant intends to move in with more people than the apartment is intended for.
Solvency of the replacement tenant
A replacement tenant is considered solvent if they are able to pay the rent and ancillary costs punctually. As a rule of thumb for apartments, the rent should amount to approximately one-third of the net income.
If the replacement tenant has debt enforcement proceedings or loss certificates against them, this may indicate that they are unable to pay the rent and ancillary costs or that they may not be able to do so in the future. However, not every entry in the debt enforcement register justifies the assumption that the applicant is financially incapable (unjustified debt enforcement proceedings).
Assuming the lease under the same conditions
The replacement tenant must be willing to assume the lease under the same conditions.
This means that there should be no reduction or increase in the rent and ancillary costs. If the replacement tenant imposes conditions, the landlord is entitled to reject the candidate. Conversely, the landlord is not allowed to demand an increase in the rent from the replacement tenant.
If the lease has already been terminated in due course, and the tenant expresses the desire to return the rental property prematurely afterward, the replacement tenant takes over the lease in its terminated state. They must vacate the rental property and return it to the landlord at the end of the notice period, although in most cases, a new lease agreement is concluded.
Vetting of the replacement tenant
The landlord has the right to vet the replacement tenant(s). Sufficient time should be granted for this purpose. The duration of the assessment depends on the circumstances of each individual case and the information provided by the tenant about the candidates. The more and better the information and documents, the faster the landlord can conduct the assessment. In the case of residential and commercial properties, a duration of between ten and 30 days is generally assumed for the vetting process.
No contractual obligation
The landlord is not obligated to accept a replacement tenant proposed by the tenant. They are free to prefer another applicant for the rental property.
However, if the preferred applicant can only establish a tenancy at a later date, the tenant is released from the obligation to pay rent from the point at which a proposed, reasonable, and financially capable candidate was willing to assume the lease agreement (BGE 134 III 267 E. 3).
Cooperation of Landlord
As soon as the landlord is informed of the tenant’s intention to return the rental property prematurely and the desired date, they should be notified.
The search for a replacement tenant is primarily the responsibility of the tenant. Only if they propose a reasonable replacement tenant can they be released from the obligation to pay rent. However, the landlord also has a duty to mitigate damages, which means they must also make efforts to find a new tenant for the property (art. 44 para. 1 CO in conjunction with art. 99 para. 3 CO in conjunction with art. 264 para. 3 CO).
The duty to mitigate damages requires the landlord to promptly and diligently evaluate potential replacement tenants proposed by the tenant and accept a suitable and acceptable replacement tenant at the earliest possible date.
However, the duty to mitigate damages does not require the landlord to advertise the rental property. Landlords sometimes maintain lists of interested parties and are required, as part of their duty to mitigate damages, to contact these parties.
Rejection by Landlord
If the landlord rejects one or more reasonable and financially capable candidates, the tenant is released from the obligation to pay rent from the point at which the candidates were willing to assume the lease agreement. The following cases are also considered rejections:
- The landlord does not respond to proposed replacement tenants and rejects the return of the rental property.
- The landlord informs the tenant that they will only enter into a new lease agreement with a suitable tenant after the expiration of the notice period.
- The landlord demands a higher rent or worsens other the lease conditions for the applicant.
What happens if no replacement tenant is found?
If no reasonable and financially capable replacement tenant is found, and the tenant still wishes to return the rental property prematurely, a date for the return of the rental property must be agreed upon with the landlord, and the return must be carried out.
The tenant must pay the rent until the point at which the lease could have been properly terminated.
Can the landlord refuse the early return?
Once the tenant has expressed their intention to return the rental property prematurely, the landlord cannot refuse the early return. Refusal may, under certain circumstances, result in the tenant being released from the obligation to pay rent, or at least the landlord will be credited with savings:
- Reduced heating costs after the tenant has moved out
- Use of the rental property by the landlord (e.g., as a storage room)
- Renovation of the premises (not just repairs for which the tenant would be responsible).
Further reading
