Termination of the contract is most often an “emergency” way to resolve a dispute or conflict. Where there is no agreement, where the contradiction has an irreconcilable nature, the party resorts to early termination of relations and withdrawal from the contract. With regard to leasing, this is of particular importance, since, for example, real estate leasing is a complex and multifaceted process associated with a large volume of mutual rights and obligations that determine its legal and practical content. By their nature, lease relations are long, extended in time, especially when it comes to long-term leases, where the relations of the parties acquire the character of a well-established long-term practice.
In the practice of the work of the owner-lessor of commercial real estate, it is very important to have a clear understanding of the reasons and grounds for which the tenant has the opportunity to terminate the contract ahead of schedule, imposing, moreover, responsibility for it on him. In general, such grounds are the result of the lessor's failure to fulfill obligations related to ensuring the maintenance of the functionality of the leased property. It is important to know the volume of such obligations to the owner of the real estate object (for example, a shopping center), since the strength of his position depends on the timely elimination and prevention of reasons for termination of the contract, and on the scale of the shopping center it is crucial to maintain stability and overall performance. This understanding is also important in the practice of concluding lease agreements between individuals, regardless of the immediate purpose of such a lease.
Rent and hire
Approaching the issue from its basics, it should be noted that rent is the transfer of property to paid temporary possession and use. In practice, the question often arises about the meaning and correlation of the terms “rent” and “property lease”. The sources of this distinction are found in the German Civil Code of 1896. Since Soviet civil law (followed by the law of the post-Soviet states — Russian, Ukrainian) adopted the basic theoretical constructions of German law, both modern terms are used in modern Russian legal science, as, in general, equivalent. In German law, a lease is only such a hiring in which it is assumed to extract fruits and income from the use of property. This remark, as will become clear later, is of some importance from the point of view of understanding the “nature” of those grounds for termination, an exhaustive list of which is provided for in Art. 620 of the Civil Code of the Russian Federation. But first you need to clarify - what is the purpose of the lease from the perspective of the tenant, and what may be the fault of the lessor.
Who is the tenant and his goals
Tenant - a party to the contract that receives property in possession and use. From the content of the relations associated with the rental of commercial real estate, it follows that, as its main goal, the tenant intends to benefit from the use of property, expressed in income. In rental practice, this opportunity is based on three components:
1) the functionality of the property (serviceability, functioning of the engineering);
2) the commercial attractiveness of real estate related to the landlord (location, transport accessibility, advertising of the property as a whole);
3) the commercial attractiveness and effectiveness of the tenant.
As follows, two of the three factors that determine the ability and level of realization by the lessee of their goals and objectives depend on the lessor, and therefore in the negotiation process these are potential reasons for initiating early termination of the contract at the request of the tenant. In turn, the rent that is most beneficial to the lessor depends on the level and quality of implementation of these first two conditions.
Some features of the contract
When drawing up a contract, especially for a long-term lease, they usually take into account all cases when the goals and objectives of such a lease may not be achieved. Guided by the principle of freedom of contract, participants in the negotiation process are not limited, in particular, in expanding the list of grounds for terminating the contract. Unless otherwise provided by the contract (agreement), the tenant's termination of the contract due to the low commercial result of the activity (its loss-making) is not allowed.
The factor of commercial attractiveness of the facility as a whole (shopping center) is decisive for the possibility of market changes in rents (both downward and upward). The corresponding mechanism, directly or indirectly affecting the amount of rent, can be implemented, by agreement of the parties, in the text of the contract. However, this factor alone cannot be the basis for termination unless it is expressly indicated as such in the text of the contract or agreement.
Among other things, it may be important to determine the immediate reason why the activity of the lessee is unprofitable. This can be both the reasons caused by the low commercial attractiveness of the property as a whole (depending on the landlord), and the reasons caused by the low commercial attractiveness and the efficiency of the tenant (i.e. depending on the tenant). Depending on such a valid reason, by agreement of the parties, as a good business practice, early termination may be allowed, but extrajudicial settlement of the terms and conditions related to the termination is envisaged by the parties, with the aim of protecting the party innocent of failure to achieve the goals of the lease.
Landlord Responsibility Area
The same reasons that may become the basis for the termination of the contract by the tenant are associated only with the functionality of the property. They are provided for in Art. 620 of the Civil Code of the Russian Federation.
As you can see, all such grounds have in their nature the impossibility, on a “global” scale, of achieving for the tenant the goal associated with the lease - to generate income. Moreover, the determination of the existence of such grounds, as follows from the provisions of Article 620 of the Civil Code, - the prerogative of the court.
Termination of a lease by a court
It is also important to emphasize that going to court is an extreme, compulsory measure when all possible means of an out-of-court, voluntary settlement of the dispute have been exhausted. Indeed, in addition to direct legal costs, there are indirect losses associated with long-term uncertainty, for both one and the other side, which has the character of a negative impact on any commercial activity, reducing its attractiveness. Sufficiently complex, and often overwhelming, is the litigation for the parties to the lease between individuals.
Conclusion
In general, the effective implementation of the norms enshrined in law is far from always expressed in the direct involvement of the procedure or procedure provided for by them. In particular, the provisions of Art. 620 of the Civil Code of the Russian Federation do not so much formalize the established rules as they serve, as a kind, a starting point for determining the approaches and methods of action of the parties, both the lessor and, directly, the tenant. These methods are manifested in the negotiation process in the form of a willingness to compromise, as well as in the competent documentation of such a compromise by an additional agreement, which, most often, is much more reasonable and less costly for the parties than going to court.