Legal provisions on termination of property lease contracts

I. Current situation regarding the termination of property lease contracts

In practice, termination of property lease contracts may be implemented for various reasons such as contract expiration, breach of contractual obligations, or force majeure.

The improper termination of a contract can lead to disputes and affect the rights and interests of the parties involved. Therefore, understanding the relevant legal provisions is essential to ensure compliance and the protection of each party’s lawful rights and obligations.

II. Legal provisions on the termination of property lease contracts

1. Definition of termination of a property lease contract

Article 472 of the Civil Code 2015 provides that:

• A property lease contract is an agreement between the parties whereby the lessor delivers the property to the lessee for use over a period of time, and the lessee is obliged to pay rent.

Accordingly, the termination of a property lease contract is understood as the cessation of the contract’s legal effect, either by agreement between the parties or under the law, resulting in the discharge of contractual obligations.

2. Conditions for termination of property lease contracts

A property lease contract may be lawfully terminated in different situations, provided one of the following conditions is met:

• Termination under mutual agreement between the parties;
• Termination in specific cases prescribed by law.

Properly determining the conditions for termination ensures legal compliance, protects legitimate rights, and prevents unnecessary disputes.

3. Circumstances leading to contract termination

Article 422 of the Civil Code 2015 stipulates that a contract shall terminate in the following cases:

• The contract has been fully performed;
• As agreed upon by the parties;
• The individual party to the contract dies, or the legal entity ceases to exist where the contract must be performed personally by such a party;
• The contract is cancelled or unilaterally terminated;
• The contract cannot be performed due to the nonexistence of its subject matter;
• The contract is terminated pursuant to Article 420 of the Civil Code;
• Other cases as prescribed by law.

Thus, a property lease contract shall terminate if it falls under any of the above situations.

III. Common questions regarding the termination of property lease contracts

1. When is the termination of the property lease contract considered invalid?

Article 122 of the Civil Code 2015 stipulates: A civil transaction that fails to meet one of the conditions provided in Article 117 of this Code shall be invalid, unless otherwise provided by law.

The conditions for a valid civil transaction include:

• The parties possess full civil legal capacity and act within their capacity;
• The parties enter the transaction voluntarily;
• The purpose and content of the transaction do not violate legal prohibitions or social ethics;
• The form of the transaction complies with legal requirements.

Therefore, a lease contract that does not satisfy the above validity conditions shall be deemed invalid.

2. Is prior notice required before terminating a property lease contract?

Whether prior notice is mandatory depends on the contractual terms and relevant legal provisions for each specific case. If the contract stipulates an obligation to give prior notice before termination, the parties must comply to avoid breach of contract.

In addition, Clause 2, Article 474 of the Civil Code 2015 provides: In cases where the lease term is not agreed upon and cannot be determined based on the purpose of the lease, either party may terminate the contract at any time, but must give the other party reasonable prior notice.

Accordingly, to determine whether notice is required, the parties should review both the contract terms and the relevant legal provisions applicable to their type of lease.

3. Who has the authority to terminate property lease contracts 

Under current regulations, either party to the lease contract, including the lessor or the lessee, or their duly authorized representatives, may terminate the contract. Termination may occur according to the agreed contractual terms or as prescribed by law.

4. Sanctions for breach in relation to contract termination

Clauses 1 and 2, Article 418 of the Civil Code 2015 provide that:

• A sanction for breach is an agreement between the parties in a contract whereby the breaching party must pay a certain sum of money to the non-breaching party.
• The amount of the sanction shall be as agreed upon by the parties, unless otherwise provided by relevant law.

Accordingly, if the contract includes a sanction clause for breach in cases of early or improper termination, the applicable sanction shall follow the parties’ agreement.

IV. Legal consultancy services regarding termination of property lease contracts

The above article by NPLaw provides an overview of the legal provisions governing the termination of property lease contracts. With a team of experienced lawyers and legal specialists, NPLaw offers professional, reliable legal services to ensure the optimal protection of clients’ lawful interests.