Co-tenancy and its rules
Co-tenancy (multiple tenants) and its rules
What kind of lease contract, and what are the formalities to be complied with?
While two or more people renting accommodation is a convenient and common formula, especially in Luxembourg, it is a good idea to take certain precautions to avoid frustrations, especially when the lease contract is ended. Legal advice from Maître Claudia Thirion, of the Thirion practice, court lawyer.
Maître Thirion, what are the basic rules for entering into a co-tenancy agreement?
Co-tenancy – not to be confused with sub-letting – is defined as the leasing by several tenants of the same accommodation, whether furnished or unfurnished, constituting their main residence, excluding spouses and PACS [civil solidarity pact] partners. Strictly speaking, a co-tenancy comes about when a single lease contract is signed. It is therefore essential that all co-tenants appear on the lease in order for them to have protection. This is the condition for each of them to have the same rights and obligations vis-à-vis the lessor. In default of this, the occupant would not have any rights or title, and would merely be the recipient of accommodation. Similarly, it must be borne in mind that when a single lease is drawn up in the name of all the co-tenants, a single schedule of condition report is carried out. Neither the lease or the schedule of condition details which room is allocated to which tenant. It is therefore the joint tenants who decide upon the allocation of rooms and use of the common areas.
Is there a solidarity clause between the joint tenants?
Many owners insert a solidarity clause into the lease. This is a reference indicating that each joint, or co-tenant is responsible for the entirety of the lease and the charges due, as well as for any tenancy related deterioration that may occur. In theory the tenant terminating the lease is not released from this obligation of solidarity following their issue of notice.
Is it possible to provide for a co-tenancy by means of several leases?
The lessor can also sign a contract independently with each of the co-tenants; this is therefore a multiple lease co-tenancy. A co-tenancy may exist in residential accommodation (a house or an apartment) with several lease contracts being concluded, each pertaining to a single room in this residential accommodation. There will therefore be as many contracts as there are rooms leased; each co-tenant is thus the sole signatory of their lease. They have exclusive enjoyment of this room and room(s) shared as a “communal room" (kitchen, bathroom, etc.). With this configuration, it is preferable to anticipate properly the details of the future communal life and to set these out in the lease: rooms that may be allocated to each individual, the use of shared areas, use of furniture, or of household appliances, etc.
What is the arrangement for payment of the rental and charges?
The rental is not subdivided between the co-tenants. The lessor is therefore entitled to require payment in full in one single amount, and it is incumbent upon each co-tenant to contribute their portion of the rental and charges. If the co-tenancy lease contains a solidarity clause, each/either co-tenant may be liable for the payment of the entirety of the rental, and they would then have the awkward task of collecting their portion from the other co-tenant(s). The same applies for the payment of charges.
What must the tenants do in order to cancel their joint tenancy lease contract?
If a single co-tenant wishes to quit the co-tenancy, they should notify their intention to terminate to the lessor by registered letter with confirmation of receipt, ensuring that they comply with the contractual notice period. The lease will then continue for the other remaining co-tenant(s). Each co-tenant is free to give notice independently of the others and does not need to obtain their agreement. However, the rental is not reduced in the case of the departure of one of the co-tenants. Note that, in the case of a solidarity clause, the departing co-tenant is still required to settle any non-payments on the part of those remaining in the accommodation. If the tenants all intend to terminate the lease contract, the termination sent to the lessor by recorded delivery with confirmation of receipt, compliant with the contractual notice period, must be signed by all the tenants in order to have legal effect in respect of all the tenants.
How does this work if the decision is made by the lessor?
If the lessor wishes to end the contract, they must send a termination letter to each of the tenants, unless this involves a married couple and the leased property is a family residence. In this case the notice can be issued to just one of the spouses or partners by virtue of the solidarity of the spouses provided for by the Code civil [civil law]; if the tenants are bound together by a solidarity clause provided in the lease, the termination, when it is sent to just one of them, shall produce its effects in respect of all of them.
How does one take out an insurance contract for a co-tenancy property?
For co-tenancy accommodation, as for any accommodation, the lessor requires the property to be insured against tenancy risks, in other words in relation to the tenant’s liability towards the lessor for damage that may be caused to the leased property.
Co-tenants can take out a single insurance contact covering all of them together. The drawback for this is that the insurer needs to be contacted whenever there is a change in co-tenant. Each individual can also take out an individual contract, but the risk here, in the event of a loss, is that the various different insurers “pass the buck” between each other. This solution is best avoided, unless one single insurance company is used. Another solution would be to make the lessor responsible for taking out an insurance policy on behalf of the co-tenants, with the lessor being responsible for recovering the premium, for example with payment of the rental.
What happens with the security deposit?
Upon the departure of a co-tenant, the lease does not end, and the owner/lessor does not return the guarantee deposit. This will only be reimbursed by the latter upon the ending of lease, in other words when the keys are handed over to the lessor by the last co-tenant, so long as no money is due on the security deposit. Thus, if the outgoing tenant has paid part of the security deposit, the only solution that will enable them to recover their money is to reach an agreement with the remaining co-tenants or with the new occupant, or otherwise to wait until the end of the lease contract for all of the tenants.
Maître Claudia THIRION
Emilie DI VINCENZO