If you are curious about the rules regarding time limited tenancies as well as how to avoid important pitfalls, this article if for you.
What is a time limited tenancy
According to the Rent Act, the rule of thumb is that a tenant cannot be terminated unless the tenant violates the lease, fails to maintain the tenancy and comply with house rules etc. This can, however, be modified in some instances.
According to the Rent Act, the landlord can limit the rental period of a tenancy. In practice, this means that the tenancy is only valid for a certain period of time, e.g. 6 months, whereafter the tenancy automatically ends. In order to time limit a tenancy, certain conditions must be met.
Conditions for time limited tenancies
The Rent Act states that for a tenancy to be time-limited the landlord must give an adequate reason to do so. The landlord is also obligated to be able to document this reason. The question is then: when is a landlord’s reason adequate enough?
The following reasons will typically be deemed sufficient reasoning for time-limiting a tenancy:
- Stationing abroad due to studies
- Stationing abroad due to work
- The landlord wishes to move into the residence
- Travelling for an indefinite period of time
- The landlord wishes to sell the residence but selling at the given time will lead to a bigger loss
The landlord must be able to document that there is an adequate reasoning for time-limiting the tenancy. The landlord must, for example, be able to prove that he/she would suffer a loss from selling the residence at the given time, where the time-limited lease was entered.
If you are a landlord and wish to move into the residence, you must be aware that the reasoning is not sufficient if it concerns a freehold flat that you have not lived in, or if you rent out more than one tenancy.
To sum up, the landlord must have an adequate reason for time limiting the tenancy, and the landlord must be able to document this reason.
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Many landlord believe that there is a 2-year-rule. With this rule, they think that they can terminate a tenant without any problems. This is, however, not true, and this rule does not exist.
Louise is going to study abroad in China from February 1st until June 1st. She lives in a great apartment in Aalborg that she does not want to terminate. She finds out that she can sublease the apartment, while she is studying abroad in China.
Louise chooses to sublease the apartment and finds someone to occupy the apartment, while she is in China. She needs to make a lease that she finds here. Louise notes in the lease’s § 11 that the lease is time-limited and only be valid from February 1st until June 1st.
Irrevocability in a time limited tenancy
According to the Rent Act, a time-limited tenancy ceases when the time limit expires. Termination can therefore not be done before this point in time. Termination occurs automatically in these cases. The tenant/landlord does therefore not need to terminate the lease under the normal rules of termination concerning terms of notice, etc.
If one of the parties in the tenancy violates the rental agreement, there is a possibility for termination. This applies for both tenant and landlord. It can also be arranged in the lease that that the lease is not irrevocable. If such agreement has been made, it can be found in § 11 of the lease. It is, therefore, a good idea to read this paragraph thoroughly before signing the lease. It is also here you will find any information about extra obligations and/or any restrained rights. However, there are fixed rules in the Rent Act that cannot be deviated from.
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If you have rented a time limited residence and you occupy the tenancy for more than 1 month after the arranged expiry of the rental period without the landlord inciting you to move, the tenancy will continue without a time limitation.
The 2-year-rule in leases
Many tenants as well as landlords mistakenly think that a 2-year-rule applies, which leads to landlords thinking that they can terminate a lease at any given time if the lease is time-limited to under two years. This is a common misunderstanding. The above mentioned rules still apply.
From a time limited to a non-time limited tenancy
In the Rent Act, it is stated that a tenancy can change from a time limited to a non-time limited tenancy. If the tenant does not move out when the time limited lease ends and the landlord does make tenant aware of this within one month from the time the landlord becomes aware of it, the lease changes from a time limited lease to a regular lease. It is the landlord’s duty incite the tenant to move out if the tenant continues to live in the tenancy. The consequences of not inciting the tenant to move can be serious. In principle, the tenant can keep living in the tenancy as long as he/she wishes if the landlord does not have any legitimate reasons for terminating the lease.
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To arrange a time limited lease the regular lease form for tenancies is used: standard A9 lease. It must, however, be stated clearly in the lease that it is time limited. If the lease is not to be irrevocable, this must also be stated clearly in § 11 of the lease.
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Prolongation of time limited leases
If you want to prolong a time limited lease, this can in fact be done. However, it is not something that the Rent Act covers, as it does not regulate this matter. Instead, it is specified in terms of case law. It appears from case law that it is a requirement that this is express clearly in the new lease and that both parties thereby are in a clear agreement.