Tacit lease renewal: for fixed or indefinite term?

Article 1738 of the Old Belgian Civil Code, which still applies today to all (common law) leases, states that when a tenant, after the expiry of a fixed-term written lease, continues to use the leased premises without opposition from the landlord, a lease renewal is established on the same terms as the terminated written lease, including in terms of duration.

This provision presupposes that the parties did not enter into a new written lease on – per hypothesis – the same terms. Article 1738 of the Old Civil Code, on the contrary, assumes the case that the parties did not put anything on paper nor agreed otherwise and therefore creates a legal presumption that a new – albeit tacit – contract was nevertheless concluded, on the same terms.

What happens if that tacit agreement also ends, upon expiry of the duration period (which by definition was the same as the duration provided for in the initial written lease), and especially if the tenant again simply stays in the premises without opposition from the landlord.

The Supreme Court (Cour de cassation) was asked to rule on this, in a judgment of 17 March 2023 (Cass. (1e k.) AR C.22.0232.N). In doing so, the Court looked at the wording of the law on the one hand, noting that Article 1738 expressly speaks of an initial written lease. On the other hand, the Court stated that the new (tacit) lease agreement should logically be considered to be an oral agreement, as the retention of the terms from the initial agreement does not result from a newly concluded written agreement, but from a legal presumption of a tacit agreement between the parties, contained in Article 1738 Old Civil Code.

Extending the reasoning, the Court concluded that if, after termination of this oral fixed-term lease, the tenant continues to occupy the premises without opposition from the landlord, there cannot be another tacit lease renewal, as such renewal, under Article 1738 of the Old Civil Code, presupposes the termination of a written fixed-term lease.

Under what title is the tenant then supposed to continue using the premises? One assumes in such a case that another oral lease is established anyway, with the same rent amount, but this time of indefinite duration. This in turn has, among other things, the consequence that this lease can be terminated at any time, by either party, with only one month’s notice.

The submitters of the draft bill introducing Book 7 “special contracts” into the new Civil Code did not consider this to be an ideal situation. They considered that the rule that after an initial fixed-term renewal, an oral contract arises, so that any further renewal would automatically be of indefinite duration, does not seem to correspond to the expectations of the parties and leads to legal uncertainty.

The draft bill therefore envisaged the introduction of a new article 7.3.35 ‘Lease Renewal’ in the Civil Code, which would state that “if the tenant continues to use the property after the expiry of the agreed term, without opposition from the landlord, a new contract will be established on the same terms and for the same duration as the original contract“, i.e. with no requirement that the first contract must be in writing.

However, the draft bill expired on 27 May 2024 as it did not get approved before the dissolution of the Belgian Parliament. Until further notice, tenants and landlords will therefore still have to consider the Supreme Court’s position.

Michael Bollen | MRICS

Laurius Real Estate

12 June 2024