– July 12, 2022

Cancellation of an apartment due to a renovation: What do I have to consider?

We own an older rental property with long-term tenants. Due to the age of the property, we are forced to renovate it. What do we need to consider if we have to terminate the lease due to this renovation work?

According to Art. 271, Para. 1 of the Swiss Code of Obligations, no special reasons are required for the termination of a rental agreement, as long as it is within the bounds of good faith (Art. 2 of the Swiss Civil Code). In principle, a termination does not violate good faith if it takes place due to renovation work. The termination is only abusive if at the time of the termination it was already obviously clear that a building permit would not be granted, if the building project was not fully developed or if the financing of the renovation work had not yet been secured. However, the fact that the original renovation work is not approved as planned, without this being obvious in advance, does not directly mean that the termination is abusive.

If the building application was examined before the notice of termination was issued and no obstacle to a possible approval of the project was found, the notice of termination is not abusive even if, despite the examination, no approval is finally granted (BGer 4A/2021).

However, given the case of renovation works, during which the tenants could possibly remain in the apartment, since the works are not or only insignificantly disturbed by the tenants remaining, a termination can be interpreted as abusive.

Thus, the tenancy may be terminated on the grounds of renovation work, provided that it would be possible to obtain a building permit. However, if the work is renovation work that will not be disturbed by the tenants remaining in the apartment, it may be an abusive termination.

Please note that for the termination the formal requirements according to Art. 266l ff. OR must be observed. If the formal requirements are not met, the termination is considered null and void (Art. 266o OR), i.e. the termination has no legal effect and would have to be reissued. 

Do you have any questions regarding matters of tenancy law? Our attorneys will be happy to advise you.