Termination of a Lease Due to Urgent Need

The acquisition of a rented residential or commercial property regularly raises issues under tenancy law, particularly where the new owner intends to use the premises personally or to carry out structural alterations. A key question in this context is under which circumstances a lease may be lawfully terminated on the grounds of urgent personal need.

When does an urgent need exist?

An urgent need exists where the landlord can demonstrate serious and objectively justifiable reasons requiring the use of the rented premises personally or for the benefit of close relatives or relatives by marriage. The need must be specific and current and may not be merely hypothetical, vague or based on future intentions.

Ordinary termination

A distinction must be made between ordinary and extraordinary termination. Open-ended lease agreements may be terminated by either party in compliance with the statutory or contractually agreed notice periods and termination dates. As a rule, the notice period amounts to three months for residential premises and six months for commercial premises. These periods may be contractually modified, making it essential to review the lease agreement.

An ordinary termination by the landlord must be issued using a cantonal form approved pursuant to Art. 266l para. 2 of the Swiss Code of Obligations (CO). The indication of the reason for termination is not mandatory; however, the landlord must provide reasons upon request by the tenant. Urgent own need constitutes one of these grounds.

Extraordinary termination

As a general principle, a change of ownership does not terminate existing leases. Accordingly, in the event of a change of ownership due to sale, exchange or any other transfer of title, existing lease agreements pass to the new owner. Termination due to urgent need constitutes an exception to this rule.

Pursuant to Art. 261 para. 2 lit. a CO, the new owner of a property is entitled to terminate a lease agreement, subject to the statutory notice period, for the next customary termination date. This extraordinary right exists independently of any contractual notice periods. To exercise this right, the new owner must demonstrate an urgent need to use the premises personally or for close relatives or relatives by marriage.

This extraordinary right of termination may be exercised only once following the acquisition of the property. If the new owner fails to give notice for the next statutory termination date, termination on the grounds of urgent need is no longer available. This right does not apply if the lease agreement has been pre-registered in the land register.

In addition, urgent need must be given particular consideration where termination is issued during a statutory blocking period pursuant to Art. 271a para. 3 lit. a CO or in proceedings concerning the extension of the lease under Art. 272 para. 2 lit. d CO:

• A termination issued during a blocking period is generally subject to challenge under tenant protection rules; however, it may nevertheless be valid if the landlord can demonstrate an urgent need for personal use or for close relatives.
• Where the tenant applies for an extension of the lease, a balancing of interests is carried out, weighing the hardship caused to the tenant against the interests of the landlord. A substantiated claim of urgent need constitutes a significant element of the landlord’s interests and must be taken into account in this assessment.

Conclusion

Urgent need constitutes a recognized ground for termination, in particular for extraordinary termination following the acquisition of a property. It is also relevant as a justification for termination during a statutory blocking period and as a key factor in the balancing of interests in extension proceedings. Given the strict substantive requirements and formal modalities governing terminations based on urgent need, timely legal advice should be sought.