Portugal

in Special Contracts under the Law of Obligations in this series). A lease is a contract whereby one party (landlord) grants another party (tenant) the use of property for a certain period of time in return for payment of rent. The essential terms of a contract of lease are the identification of the parties and the property to be leased and the payment of rent. A distinction is made between leases of movables and leases of immovables. Leases of urban immovables (arrendamento) are governed by the Portuguese Civil Code (Civil Code, arts. 1064–113).109 Agricultural and forestry leases are now regulated by Decree-Law 294 of 13 October 2009, which replaced the old regime of agricultural110 and forestry 111 leases.

The contract of lease must be in writing if it is to last more than six months (Civil Code, art. 1069). Registration in the Land Register is required to make leases of residential, commercial, industrial or professional premises lasting more than six years enforceable against third parties. Leases of other premises lasting less than six years need not be registered to be enforceable against third parties.

A contract of lease of agricultural property is usually reduced to writing and a copy thereof must be delivered to the Tax Office and the Regional Department of the Ministry of Agriculture within thirty days after conclusion of the lease (Decree-Law 294/2009, art. 3). Agricultural leases need not be registered and no administrative fees are payable (Decree-Law 294/2009, art. 6).

Portuguese law, in general, does not allow leases for a term of more than thirty years. A clause purporting to allow a ‘lease for life’ or a lease exceeding thirty years would be void but would not invalidate the entire contract. The term of the contract would simply be reduced to the thirty-year limit (Civil Code, art. 1025). An exception is made in the case of forestry leases, which may be concluded for a term of between seven and seventy years (Decree-Law 294/2009, art. 9(1)). Agricultural leases must be concluded for a term of at least seven years (Decree-Law 294/2009, art. 9(1)) and is renewed automatically if none of the parties gives notice of termination (Decree-Law 294/2009, art. 9(3)).

A lease of urban dwellings can be time-limited (contratos com prazo certo). However, it cannot last less than five years or more than thirty years (Civil Code, art. 1095). Only if the contract is for transitory purposes, such as tourism or education, no minimum duration is required. At the end of the fixed period, non-transitory leases are automatically

109 Replacing Law 6/2006 of 27.02 (NRAU). 110 Replacing Decree Law 385/88 of 25.10. 111 Replacing Decree Law 394/88 of 8.11.

114 c a s e s t u d i e s

renewed (for successive three-year periods) if neither of the parties gives notice of termination (Civil Code, art. 1096).

If parties do not fix a time-limit for the contract, it is considered to be of indefinite duration (contrato de duracüa÷o indeterminada). The parties concluding commercial, industrial or professional leases can freely agree on the duration of the lease and, if not fixed, the duration is set at ten years (Civil Code, art. 1110(2)).

A lease will terminate on expiry of a fixed term (caducidade),112 by mutual agreement (revogacüa÷o) or by notice based on a specific cause prescribed by law. To prevent the automatic renewal of fixed term leases, the landlord must notify the tenant and the tenant the landlord at least one year or 120 days respectively, before the end of the term.

A distinction is made between an ‘ordinary’ (resolucüa÷o) and a ‘specific’ notice (denu«ncia). An ‘ordinary’ notice is appropriate where the material breach of a contractual term destroys the relationship between the parties to such an extent that it is not just and reasonable to expect the other party to continue the relationship (Civil Code, art. 1083). ‘Specific’ notice is required in cases where the landlord has an objective and legitimate interest in the termination of the lease contract (for example, where the landlord needs the premises for his/her own use or for that of his/her family or where he/she wants to rebuild or restructure the premises). Specific notice (ad nutum) is only possible in leases concluded for an indefinite term. Specific notice by the landlord will become effective five years later (which is the minimum duration for an indefinite term lease). The tenant may give specific notice by advance notice of at least 120 days before termination.

Portuguese academic opinion is divided on the question of whether a tenant acquires a real or property right on entering into possession of the leased premises or land. The minority view is that he/she does acquire a property right enforceable against the world.113 The majority view is, however, that he/she acquires only a relative contractual (personal) right.114 The latter view, supported by case law, led to the conclusion that since the lease creates purely contractual rights, the landlord need not be the owner of the leased property and that persons with the right to administer the property are capable of establishing leases

112Garcia, Arrendamento Urbano, pp. 206 ff.

113Oliveira Ascensa˜ o, Direito Civil, p. 519; Menezes Cordeiro, Direitos Reais, p. 689; Pinto Futardo, Direitos Reais, p. 161.

114Mesquita, Obrigacüo÷es Reais, pp. 131 ff.; Coelho, Arrendamento, pp. 205 ff.; Pires de Lima and Autunes Varela, Co«digo Civil Anotado, vol. 3; Pinto Furtado, Manual, p. 64.

with regard to that property.115 Despite the non-proprietary nature of the right of the tenant, the latter’s right is strongly protected by the law. Civil Code, art. 1037 accords a tenant the same protection as a possessor by

extending the remedies for disturbance or deprivation of possession to the tenant.116

A may grant B a right of usufruct (direito de usufruto) over the property. Usufruct is a real right that entitles the usufructuary to use the property and to take its fruits without impairing its form or substance (Civil Code, art. 1439).117 A usufruct can be created by contract, by last will, by adverse possession (usucapio) or by legal provision (Civil Code, art. 1440). The usufruct cannot exceed the lifetime of the usufructuary or endure for more than thirty years if the usufructuary is a company, an association or a charity (Civil Code, art. 1443). A usufruct automatically expires on the death of the usufructuary, on expiry of its term, or where the usufructuary acquires ownership of the property in question. Renunciation by the usufructuary (Civil Code, art. 1476), non-use of the property for a period of twenty years or complete destruction of the property will also bring the right to an end. For a usufruct to be enforceable against third parties, it must be embodied in a written deed (escritura pu«blica) executed by a notary, or in a private document certified by a notary (documento particular autenticado),118 and registered against the title deeds of the servient property.

All the provisions mentioned above are mandatory.

A can grant B the real right of use and habitation (direito de uso e habitacüa÷o) over the property. The right of habitation concerns the use of a dwelling (Civil Code, art. 1841 no. 2). The right of use entitles the usuary to use the property and to take its fruits but only to satisfy personal and family needs (Civil Code, art. 1484 no. 1) determined by reference to the holder’s social and economic status (condica÷o social) (Civil Code, art. 1486). The family of the holder of the right includes his/her partner, unmarried children, other relatives to whom the usuary owes maintenance and employees living with him/her (Civil Code, art. 1487).

The right of use and habitation can be created by contract, by last will or by legal provision. Unlike usufruct, however, it cannot be acquired by

115The lease will nevertheless expire along with the principal right (Civil Code, art. 1051).

116Mesquita, Obrigacüo÷es Reais, pp. 148 ff.

117Unless otherwise indicated, all the provisions refer to the Portuguese Civil Code, approved by Decree 47344 of 25.11.66 and came into force on 01.06.67.

118Art. 22 of Decree-Law 116/2008 of 24 July.

116 c a s e s t u d i e s

adverse possession (Civil Code, art. 1485). The rules on the termination of a usufruct apply equally to the right of use and habitation (Civil Code, art. 1485).

For a right of use and habitation to be enforceable against third parties, it must be embodied in a written deed executed by a notary, or in a private document certified by a notary (documento particular autenticado),119 and registered against the title deeds of the servient property.

The rules mentioned above are also mandatory.

A can grant B a hereditary building lease (direito de superfõ«cie). The right of superÞcies entitles the holder to erect a building or to plant crops and trees (in the case of a farm) (construir uma obra ou fazer plantacüo÷es) on another’s property, perpetually or for a certain period of time. This also comprises the right to retain and use (manter) existing buildings, crops or trees on the land (Civil Code, art. 1524). The right of superÞcies can be created by contract, last will or adverse possession as well as by alienation of a building or trees on the property separately from the soil (Civil Code, art. 1528). When created by the State or other public authority, the holder of the right may be subjected to specific obligations (Civil Code, art. 1527).120 There is no legal limit on the duration of a right of superÞcies. The right of superÞcies expires if the holder does not complete the building or the planting before the time limit set by the parties or before the legal limit of ten years. Termination will also occur where the building or trees are destroyed without being restored, on expiry of a fixed term, on the holder acquiring ownership of the property, when the soil no longer yields fruits (becomes infertile), or if a public authority expropriates the property (Civil Code, art. 1536).

For a right of superÞcies to be enforceable against third parties, it must be embodied in a written deed executed by a notary, or in a private document certified by a notary (documento particular autenticado),121 and registered against the title deeds of the servient property.

119Ibid.

120Decisions of the Supreme Court of Justice of 29.10.1999 [Process 98B682] (a right of superÞcies was granted by the City Council to develop an industrial area); of 4.10.1995 [Process 087611] (a right of superÞcies was created, in favour of an association aiming to help handicapped children); Decisions of the Administrative Supreme Court of 31.10.2001 [Process 046777] (the City Council created a superÞcies right, in favour of a housing co-operative); and of 5.7.1994 [Process 033571] (the City Council created a right of superÞcies entitling the holder to build a kindergarten), all available at www. dgsi.pt.

121Art. 22 of Decree-Law 116/2008 of 24 July.