Comparative observations

for minor (ordinary) repairs which fall outside this category.3 Major repairs under the Portuguese Law on Urban Leases include works of which the cost will exceed two-thirds of the net annual income of the building, and improvements ordered by public authorities. The relevant Polish legislation provides that the landlord must ensure that installations for the provision of gas, water, heating, sewerage, electric current and lifts (elevators) function properly; maintain the common parts of the building in a functioning and clean state; and repair damage caused by vis maior. In South Africa and Belgium, the landlord is responsible for major structural repairs and all smaller repairs occasioned by the age or inferior quality of the materials involved. Defects caused by normal wear and tear fall outside this category and in South Africa they are presumed to have been caused by the tenant or his/her employees. The tenant is therefore responsible for these ‘tenant’s repairs’, such as the repair of defective doors, windows, shutters, hinges and locks that are presumed to have been in a good condition4 when the tenant entered into occupation.5

In England, except for some statutory regulation, it is left to the parties to regulate their repair obligations expressly in the lease itself. The Landlord and Tenant Act implies certain terms in favour of the tenant in respect of short leases of dwelling houses. The terms require the landlord to keep the following in repair: the structure and exterior of the dwelling house (including drains, gutters and external pipes); the water, gas and electricity service installations including basins, sinks, baths and sanitary conveniences but not other fixtures, fittings and appliances; and installations for heating spaces and water. The terms are mandatory but can be dispensed with by leave of the County Court. In agricultural tenancies, the model repair clauses in the Agricultural Holdings Act, among others, divide the repair of ‘fixed equipment’ between landlord and tenant. These clauses can be contracted out under threat of being subjected to arbitration.

3In Denmark, the default rule under the Law on Private Housing is that the landlord is responsible for keeping the premises in good repair and he/she has a duty to repair, replace and renew all items that fall into disrepair from whatever cause. The only duty of the tenant is to maintain and, where required, replace the lock and keys of the building.

4In the absence of a document attached to the lease detailing the condition of the property, Portuguese law presumes that the property was in good condition on transfer to the tenant.

5See also the default rule under the Hungarian and Spanish Laws on Residential Leases.

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Most jurisdictions6 will rule that the defective heating system, the dilapidated fences and the ßaking paint will render the property unfit for the purpose for which it is let and will therefore hold the landlord responsible for repairing these defects if they were caused by age or inferior materials. In contrast, the German, Italian and Polish law pertaining to agricultural (or income-producing) leases will characterise the dilapidated fences, flaking paint and minor defects in the heating system as defects arising from normal wear and tear, the repair of which will be the responsibility of the tenant.

In most jurisdictions,7 the landlord will be responsible for the repair of the roof in order to ensure that the premises is fit for the purpose for which it is used even though the defect was caused by vis maior.8 In England, the landlord will be responsible for the repair of the roof if tiles were blown off by the wind, but not if the building was demolished completely by the storm. If the property is partially destroyed in Belgium, the owner is not obliged to rebuild.9

Most jurisdictions10 will classify the replacement of an obsolescent heating system with a modern system not as a ‘repair’ but as an ‘improvement’11 for which the landlord is not responsible. Some jurisdictions, however, equate obsolescence with non-repair,12 and classify it as a conservation measure13 or include renewals under repairs and hold the landlord responsible, especially if the replacement improves the general condition of the residence and the costs do not exceed the rental income or public subsidy gained from the lease.14 German law requires replacement by the landlord if the tenant can prove that his/her health is affected by the obsolescent system.

6E.g. Germany, Austria, Greece, Portugal, Spain, Denmark and South Africa under their default or mandatory rules (e.g. Belgium and Portugal under the Law on Urban Leases and England under special legislation).

7E.g. Austria, Greece, Spain, Italy, Belgium, Portugal, Denmark, South Africa and Poland (in the case of residential leases). In Portugal, the landlord will only be held responsible if repair of the roof is ordered by a public authority.

8The South African rationale is that the landlord is responsible for procuring insurance and paying the insurance premiums.

9See also the Scottish report.

10E.g. Germany, Greece, Portugal, Spain, Belgium, Scotland and Poland.

11Replacement is classified as a useful expense recoverable from the landlord based on actual or implied agency.

12See the English report. 13 See the Portuguese report.

14See the Austrian and South African reports, especially the latter on the replacement of guttering.

Most jurisdictions15 accept that the default rules are not mandatory and that parties can deviate from them either expressly or impliedly in the contract of lease or in a separate contract. The tendency is to shift as many repair obligations as possible onto the tenant. In Germany, there is extensive case law on the extent to which parties may deviate from default rules. German courts take a conservative view and only allow the lessee of residential property to assume responsibility for minor repairs such as painting the walls of an apartment but not for major structural repairs. South African, Belgian and Danish law also construe all deviations strictly in order to saddle the tenant with as few repairing obligations as possible. In Danish law it is quite common to allow residential tenants to take on the duty of whitewashing the exterior and painting and papering the interior. In the case of a lease of a singlefamily house it is customary for the tenant to assume the duty to repair the outbuildings and garden. Portuguese law adopts a more liberal approach, especially in urban leases of commercial, industrial and professional property. Parties are allowed to agree in a written deed that ordinary and even extraordinary works of repair and improvements to the property will be the tenant’s responsibility. The Polish legislation on agricultural leases makes provision for different default rules shifting some of the repair obligations to the tenant, who is then responsible for all repairs necessary to maintain the property in its former condition.16

In most jurisdictions,17 the landlord will not be responsible for repairing defects or damage caused by the tenant, members of his/her family, guests or other persons for whom the tenant is responsible. The tenant must therefore observe the diligence of a reasonable man in using the property for the purpose specified in the contract or implied from the circumstances. This may require positive steps. A vineyard must, for example, be worked and manured in a timely fashion and cultivated carefully according to the standards of a prudent winegrower. A hotel must be exploited in a manner that attracts customers. If not regulated by the repairing covenant, the tenant in England must use the property in a tenant-like manner, must compensate the landlord for any defects or damage caused by his/her negligence and must return the property intact at the end of the tenancy. In Greece, the tenant will moreover be

15E.g. Germany, Greece, Portugal, Spain, South Africa, Denmark, Hungary and Poland. But cf. Scotland.

16See the Polish report.

17E.g. Germany, Austria, Greece, Spain, Italy, Belgium, South Africa and Denmark.

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personally barred from claiming the cost of the repair of defects which were known to him/her at the time of the conclusion of the contract or which he was unaware of owing to gross negligence on his/her part. The same applies in respect of any claim by the tenant that the property lacks certain qualities that have been stipulated in the contract. In Denmark, damage caused by the negligence of one of the parties gives rise to delictual liability. If the cost of future repairs is saved, this may be deducted from the compensation awarded.

In most jurisdictions there is a duty on the tenant to inform the landlord if (urgent) repairs are needed and to allow the landlord to carry out the repairs in order to prevent further loss.18 However, each party remains responsible for loss caused by his/her negligent acts or omissions and is responsible for all damage that flows from non-repair.19 Thus, if a wall is seriously damaged on account of not being repainted on time, the landlord will bear the cost of its restoration if he/she was aware of the defective condition or should have been aware on account of his/her trade.20 In Spain, the residential tenant may undertake the repairs and reclaim the costs from the landlord, whereas the agricultural tenant can compel the landlord to comply with his/her obligation by an order of court, an action for breach of contract, a request for reduction in rent or execution of the repairs, followed by a claim for reimbursement. In England, the loss caused by a failure to repaint can be characterised as permissive waste for which the tenant is responsible.

Most jurisdictions21 adopt the rule that the usufructuary is responsible for ordinary repairs necessitated by his/her exploitation of the property in accordance with its economic purpose, whereas the nude owner is responsible for extraordinary repairs.22 In general, this amounts to periodic repairs of moderate cost not exceeding the total rental income of the land (Austria and Spain) or two-thirds of the rental income (Portugal and Italy). The most important criterion for distinguishing ordinary and extraordinary repairs is whether the repairs are necessitated by normal wear and tear. The prevailing opinion in Italy is, however, that unless

18See e.g. the Greek, Belgian, Spanish, Portuguese, Italian, South African and Hungarian reports. The tenant will have to bear the loss resulting from non-timeous notification (in South Africa on the principle of volenti non Þt iniuria).

19See e.g. the German, Austrian, Greek and Belgian reports.

20See the South African report.

21E.g. Germany, Greece, France, Portugal, Spain, Belgium, Italy, the Netherlands, South Africa, Hungary and Poland.

22The French, Belgian and Italian Civil Codes contain lists of major repairs.

serious damage might result from non-compliance with this obligation, the owner cannot force the usufructuary to carry out these repairs.23 This is subject to the rule that the holder is obliged to return the property on expiry of the usufruct with the preservation of its substance, that is, in a state of good repair.24

If the nude owner delays in carrying out extraordinary repairs without justifiable reason, the usufructuary may carry out the repairs and his/her estate may claim the cost minus the cost of any deterioration from the nude owner at the expiry of the usufruct.25 The usufructuary is under an obligation to warn the nude owner of the need to carry out urgent repairs.26 An omission in this regard is usually traced back to bad management of the property and any resulting losses may be claimed from the usufructuary.

Most jurisdictions27 will classify the repairs needed to restore the defective heating system, the dilapidated fence and the ßaking paint as ordinary expenses which must be borne by the usufructuary. In Austria, this is subject to the condition that the costs do not exceed the amount which the usufructuary gains from the property. However, if any of the repairs involve major expense, for example, if the entire heating system or the entire fence has to be replaced, the repairs will be classified as extraordinary and the nude owner’s responsibility.28 In France, the nude owner will be responsible for replacing the fences, but not for limited and specific repairs to the fences.

Most jurisdictions will consider minor repairs to the roof necessitated by a storm (the replacement of a few tiles), as ordinary repairs for which the usufructuary is responsible. Major repairs needed for the conservation of the property will be classified as extraordinary, unusual or unforeseen, and the responsibility of the nude owner.29 Interestingly, under Spanish law, any repairs necessitated by a storm will exceed the limits of ordinary repairs and will thus be the responsibility of the nude

23If the nude owner carries out the repairs, he/she is entitled to legal interest on the amount expended for the duration of the usufruct.

24The German and Polish rationale for the restriction to ordinary repairs is that the usufructuary is only entitled to the ordinary proceeds of the property and is not allowed to transform the property or to change its substance.

25See e.g. the reports of Portugal, Spain, Italy, the Netherlands and Hungary.

26See e.g. the Portuguese report.

27E.g. Germany, Austria, Greece, Portugal, Spain, Italy, Belgium, the Netherlands, South Africa, Hungary and Poland.

28See the German, Dutch and South African reports.

29See e.g. the German, Greek, French, Belgian, Portuguese, Italian, South African, Hungarian and Polish reports.

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owner.30 The Belgian Civil Code provides that if the storm is classified as an unforeseen event (casus fortuitus), neither the nude owner nor the usufructuary is under an obligation to rebuild what was destroyed by the storm. If the nude owner decides to replace the roof, he/she will bear the cost of replacement,31 and if the usufructuary replaces the roof, he/ she will bear the cost of replacement, but subject to recourse against the owner for any surplus value on termination of the usufruct. If the usufructuary carries out major repairs to the roof, the cost will be regarded as a necessary expense which can be claimed from the nude owner on expiry of the usufruct.

The replacement of an obsolescent heating system by a more modern system can be classified either as maintenance (repair) or as an improvement of the property. If regarded as repair, most jurisdictions32 will classify the replacement as an extraordinary repair which the nude owner is obliged to execute. If classified as an improvement of the property, neither of the parties will be under an obligation to replace it.33 If the usufructuary does replace the system, it will be classified as a useful improvement which can be removed without damage during the subsistence of the usufruct34 or for which the usufructuary can claim reimbursement on the expiry of the usufruct (Portugal and Hungary),35 probably under the doctrine of negotiorum gestio.36

Since usufructs are commonly created in wills, most of the jurisdictions could not provide an answer to the question whether or not the parties may deviate from default rules. It is, however, an important question since it is becoming more and more common to create usufructs inter vivos, for example, in Germany, where contractual provisions deviating from the default rules are frequently used in practice for tax reasons. The parties may stipulate that the usufructuary must bear all costs, including those of extraordinary repairs, or, conversely, that the nude owner must bear the expenses of the ordinary maintenance of the property. Agreements on repairs and expenses are binding on everyone who acquires the property or the limited right, provided it is registered in the Land Register (Grundbuch). In Belgium, the parties often agree that the usufructuary will be responsible for extraordinary repairs.

30 See the Spanish Civil Code, art. 500. 31 See the Belgian report.

32E.g. Germany, Greece, Portugal, Spain, Belgium, Hungary and Poland.

33See the Greek, Portuguese and Italian reports. 34 See the Spanish report.

35See the Portuguese and Hungarian reports.

36See the Greek and South African reports.

Any negligent damage to the property will usually be caused by the usufructuary. Since the usufructuary must preserve the substance of the property, damage negligently caused to the property by careless administration37 will make him/her liable to the nude owner38 for the cost of repairs,39 or liable in delict for economic loss suffered by the nude owner.

Some jurisdictions40 will classify painting of the wall as an ordinary repair and thus the responsibility of the usufructuary. If serious damage is caused on account of negligent non-timeous repainting of the wall, the usufructuary will be liable to the owner for all consequential loss suffered as a result of the neglect. If the repair is classified as extraordinary, the usufructuary will be obliged to notify the owner without delay of the deterioration of the building or of the preventative measures that can be taken to avoid unforeseen further damage. If the owner refuses to act or delays in carrying out the repairs, he/she will be liable for resulting consequential loss. However, in such a case the usufructuary will be allowed to execute the repairs and claim the costs from the nude owner, probably before expiry of the usufruct.

In most jurisdictions,41 the rules applicable to usufruct also apply to the other personal servitudes, if compatible. Interestingly, Austrian law also obliges the nude owner to carry out ordinary repairs of residential premises which are subject to a right of use. Portuguese law, again, proportions the responsibility of the user and habitator for ordinary repairs, administrative expenses and taxes levied on the property if the holder of the right of use is only allowed to take part of the fruits or if the habitator only occupies part of the house. Under German law it is disputed whether a provision in an agreement establishing a right of use which changes the default rule to saddle the holder of the right of use with extraordinary repairs is valid.42

In terms of the Regulations under the German Law on Hereditary Building Rights, the maintenance obligations of the parties are determined by the constitutive agreement under which the hereditary building right is established. Unless the parties have agreed otherwise, neither the landowner nor the holder is under an obligation to maintain the structure in a reasonable state of repair. In practice, the constitutive

37 See the Portuguese report. 38 In quasi contract, according to the German report.

39See the German, Greek, Portuguese, Belgian, South African and Polish reports.

40E.g. Germany, Greece and Portugal. 41 E.g. Belgium, Italy and South Africa.

42See the Austrian, Portuguese and German reports.

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agreement often provides that the holder is under an obligation to maintain the structure and to bear all costs relating to ordinary and extraordinary repairs.

In the remaining jurisdictions, the repair obligation depends on whether the hereditary building right pertains to an existing building or to the erection of a new building. In the former case, the obligation of the holder is the same as that of the holder of a hereditary land lease under Belgian law.43 Some Italian scholars are of the opinion that the superÞciarius is in the position of an owner and therefore under no obligation to keep the building in a good state of repair or to expect the owner of the soil to repair the building. Other scholars maintain that at least some of the rules applicable to usufruct should also apply to the holder of a hereditary building right. Where the hereditary building right pertains to the erection of a new building, some jurisdictions44 do not place any repair obligation on the holder and advise parties to regulate their maintenance and repair obligations in the constitutive agreement. In other jurisdictions,45 the holder is held to be responsible for all repairs unless otherwise regulated in the constitutive agreement. The reason advanced is that the holder is considered the (temporary) owner of the new structure. Under Italian law, the holder may even demolish the structure. Under Polish law, this obligation is mandatory and not susceptible of alteration in the constitutive agreement.

The jurisdictions that recognise hereditary land leases46 distinguish between ordinary (minor) and extraordinary (major) repairs and hold the holder of the hereditary land lease responsible for ordinary repairs and the landowner for extraordinary repairs, following the rules applicable to usufruct. The holder must notify the owner if extraordinary repairs are necessary and allow him/her to execute the repairs. Interestingly, the landowner is not legally obliged to carry out the repairs and if he/she does not do so the holder is not entitled to claim any damages. Holders are not responsible for major repairs unless they were the result of their dereliction of duty. In practice, a holder may often agree to be responsible for major repairs and in the Netherlands public authorities usually impose conditions of repair on the holders of hereditary land leases.

43 See the Belgian report. 44 See e.g. the Belgian report.

45See e.g. the Austrian, French, Dutch, Italian, Spanish and Polish reports.

46See the Belgian and Dutch reports.