Austria: On the termination of the lease due to considerably detrimental use

Legal basis
According to Sec. 1118 ABGB (Austrian Civil Code), the lessor can terminate a lease unilaterally prematurely if the lessee makes a “considerably detrimental use” of the leased object. For the scope of application of the MRG (Austrian Tenancy Law), Sec. 30 para. 2 clause 1 provides a nearly identical regulation.

The scope and content of these legal provisions is a constant source of discussion.

Structural changes by lessee
The mere performance of structural alterations by the lessee without the consent of the lessor does not in itself justify a good cause for the termination of the lease.

The Austrian Supreme Court has recently ruled that an autonomous conversion alone does not entitle the lessor to an immediate termination of the contract if the essential structure of the leased object is not significantly damaged. This applies even if the intentions or specifications of the lessor are disregarded.

Rather, the termination of a contract would require a violation of important economic or other interests of the lessor or conduct that would make the continuation of the contract unreasonable.

Such a violation must be explained by the lessor. This is not the case with mere conversion work, even if this is carried out autonomously.

Properly implemented measures to improve or modernise the object of the leased object do not, in principle, constitute an infringement that justifies termination. This would not be the case, for example, even if the building authorities had to be consulted before implementing the measure or if the consent of the lessor had been required.

Essential interests of the lessor are affected if there is a substantial damage to the essential structure of the house. This is not the case, for example, with the installation of a suspended plaster ceiling or with drill holes for spotlights.

If a lessor wishes to prevent lessees from carrying out installation or conversion work without its consent, the lessor must prove why its essential interests are impaired by the respective measure.

Improvements to the leased objects or modernisations usually do not constitute an infringement that justifies termination.

Therefore, it will sometimes not be sufficient to make the execution of conversion work in lease agreements dependent on the mere consent of the lessor. Rather, concrete facts or measures should be cited which entitle the lessor to terminate the lease.

Author: Christoph Luegmair