| Subject matter: Right to unilaterally terminate rental contracts Keywords: Landlord Tenant Renewal of rental contract Right to return of property Right of preference Social function of real estate property Real rights Rights derived from civil-law obligations |
RULING Nº 267/95
30 of May of 1995
Headnotes:
Social requirements have conferred upon tenancy certain normative aspects typical of the system of a right in rem, but the legal system of tenant rights continues to retain, under present legislation, the basic traits of the rules relating to the law of obligations.
Irrespective of the juridical nature (real or personal) of the right to residential or business tenancies, this right benefits to a certain extent from the constitutional guarantee of the right of private property, from which it would appear to follow that any restriction on the free disposal of property by the owner gives rise to an expropriation of sorts, presupposing the payment of compensation. Yet notwithstanding the possibility of a «loose expropriation concept» comprising either property in the broad sense or any other individual right of a proprietary nature, for the Portuguese lawmakers only immovable property or rights thereto may be the subject of expropriation.
The principle of mandatory lease renewal, as an exception to the rule of freedom to contract and the right of the owner to terminate the contract (denunciation), has its constitutional basis in the social function of property, which is necessary to protect the needs of the tenant. Hence, the exceptional recognition of the right of denunciation does not violate property rights.
The principle of public burden sharing means that restrictions which the general interest imposes on individual rights must normally be borne by all citizens to a similar degree. If someone must bear a special burden, he or she must receive compensation. The provision concerned does not impose different burdens in identical situations, however, because it treats all tenants possessing a commercial lease for immovable property owned by the State in the same way and does not draw any materially unjustified or discriminatory distinction.
Summary:
At issue was the constitutionality of a provision which allowed the State to terminate leases relating to State-owned immovable property, even if it had already been rented prior to purchase by the State, whenever the State wished to place services on that property or to use it for other reasons in the public interest.
The applicant was a commercial company that had rented the building prior to its purchase by the State, which immediately gave notice of termination of the lease. In the view of the company, the provision that allowed termination of leases on State-owned property was unconstitutional, because in addition to the violation of the principle of equality, it was also in breach of the right to enjoy private property because the constitutional guarantee of that right, in the broadest sense, must also include the proprietary value stemming from the right to non-termination of the lease. For the commercial company, its right to renewal of the contract was tantamount to a right in rem.
The Court found that this norm was not unconstitutional, however, and upheld the case law on the personal nature of a lease, while recognising that the rights of the tenant implied certain typical manifestations of a real contract.