Urgently required for one’s own occupancy
The lessor, who wishes to take the leased property into their own urgently required occupancy, can terminate the lease agreement on that ground. Contrary to popular belief, it does not necessarily have to be the lessor personally who wishes to occupy the leased property. The lessor as well as his registered partner, a relation by blood or affinity in the first degree, or a foster child can rely on this ground for termination if they wish to take the leased property into their own required occupancy.
Another common misconception is that “urgent” means that there must be haste. However, this does not concern urgency in the sense of time. It concerns that the occupancy by the lessor of the business premises is of fundamental importance to him.
The lessor is a business
In many cases the lessor is a business (usually in the form of a private limited liability company). In practice, it regularly happens that it is not the leasing private limited liability company itself but a company affiliated with this legal entity that wishes to occupy the leased space. In that case the lessor must demonstrate that he serves his personal interest by leasing to the affiliated party. For example, it is therefore not a given fact that if a parent company, which holds 100 percent of the shares in the leasing subsidiary company, wishes to occupy the business premises in question itself, that there will be requirement for one’s own occupancy.
Change of designated use
If the lessor intends to occupy the business premises as office space within the meaning of Section 230a Book 7 of the Civil Code instead of retail space (therefore business premises within the meaning of Section 290 Book 7 of the Civil Code), this new, different occupancy does not prevent reliance on the ground for termination of urgently required for one’s own occupancy.
Renovation can also result in urgently required for one’s own occupancy
The renovation of business premises, which is not possible without the termination of the lease agreement, also falls under the concept of urgently required for one’s own occupancy. This can be the case for example if retail space is demolished and subsequently a new building is constructed with another function. Moreover, the sale of the space does not fall under this ground for termination.
Wrongly terminated? Lessors will be liable for the damage
However, lessors must realise that if it appears later that the termination was wrongly based on urgently required for one’s own occupancy, the lessee (and the sublessee the subleasing to whom took place in a duly authorised manner) can claim compensation from the lessor for the damage caused. It has been held in case law that if the leased property has not been occupied by the lessor within one year after the end of the lease agreement, the will to occupy the leased property was not present on the part of the lessor. For the estimation of the damage this inter alia concerns the lost profits and damage related to the investments not yet depreciated.