The decision of the Supreme court file no. Zn. 26 Cdo 410/2010 from 23.11.2010

i.      Applicable legal provisions

Section 680 para 2 of the Civil Code and Section 680 para 2 of the Civil Code.

ii.     Facts

The city as the landlord concluded an agreement on the lease of non-residential premises for an indefinite period of time. The tenant improved the premises at  own costs. The city granted its consent with such tenant’s improvement.

The city sold the leased property and warrantied towards the purchaser that it would settle all claims of the tenant relating its improvements made on the subject of the lease. The property was transferred to the new owner with effects on 14 August 2006. The lease was terminated on 31 August 2006.

After the termination of the lease, the tenant claimed towards the new owner the reimbursement for its investments in the amount of CZK 552.460,-

iii.   Decision and its explanation

a)    The right of the tenant for the compensation of his investments arises in the moment of the termination of the lease. Hence, the tenant is in the legal relation regarding the compensation of its investments with the entity which is the lessor in the moment the lease termination.

b)    The tenant is entitled to raise his compensation claim within the existing lease relation against the landlord at the time of lease termination and cannot raise its claim against the subject, with whom he is not in the lease relationship. 

c)    The fact that the issue of compensation of the tenant‘s investments was reflected in the purchase contract between the previous and current landlord has no relevance with respect to the tenant’s claim.