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Are tenants' claims for a discount on rent in jeopardy after the recent Czech Supreme Court decision?

According to a recent decision by the Czech Supreme Court, a tenant has no claim for a discount on rent if they contributed to the occurrence of the defect (and be it only in parts). Can this controversial decision withstand scrutiny in the light of current law? What are the statutory conditions under which the tenant's claim for a discount on rent comes into existence and may be enforced?

In a recent decision (judgment 26 Cdo 527/2017 of 11 October 2018), the Supreme Court took the legal stance that a tenant cannot claim a reduction of rent on grounds of defective rental property if the tenant contributed to the occurrence of the defect, and be it only in parts. The case at hand concerned shared responsibility for the occurrence of mold on the premises due to the tenant's failure to properly air them.

The court decided that if a rental property suffers from a manifest defect which renders the premises partially or wholly unfit for the agreed purpose, tenants who have in any way contributed to such defect have no right to claim a discount but must pay rent in the full amount to the landlord. According to the Supreme Court, the degree to which the tenant contributed to the occurrence of the defect is not relevant, nor is the question of culpability (i.e., whether the tenant acted intentionally or out of negligence).

The rationale for this decision was met with harsh criticism by the legal community. Taken to the extreme, the conclusions drawn by the Supreme Court would mean that a tenant could not claim a reduction in rent even if the defect afflicting the premises was caused willfully by the landlord while the tenant's barely discernible involvement was limited e.g. to a failure to act out of negligence.

We believe that the solution chosen by the court is at odds with the principles of equitability and propriety.

The decision is based on the legal situation created by the laws in force until the end of 2013. This prompts the question whether its conclusions may at all apply under the current rules. The New Civil Code (unlike the previous Civil Code which it has replaced) does not stipulate, in Sec. 2208, that the defect must not have been caused by the tenant if a claim for a discount is to arise. What is more, the Supreme Court's contested decision primarily refers to the letter of the law itself (i.e., Sec. 673 of the now defunct 1964 Civil Code). We thus find that the conclusions of the Supreme Court will probably be disregarded when resolving a case that is to be assessed under current law.

In such a case, the tenant ought to have a right to demand a reduction in rent even if they were partly involved in bringing about the defect to the premises in question. However, if the defect were to be due to negligent or willful action on the part of the tenant, their claim for a reduction of rent will be curtailed (via an analogous application of Sec. 2918 of the Civil Code), proportional to the degree of their co-responsibility for the defect.

In closing, we ought to mention that the successful enforcement of a reduction of rent on grounds of a defect of the rental property presupposes that other conditions are fulfilled as well: above all, the defect must be of the kind which the landlord has a duty to remove. In addition, the tenant must have duly and timely brought the defect to the landlord's attention, and the landlord must have failed to remedy the problem in spite of having been notified in time. The claim for a reduction in rent arises only if the tenant's enjoyment of the rental property is substantially hampered or altogether made impossible by the defect. The right to a reduction in rent is subject to a special statute of limitation of six months from the day on which the tenant ascertained (or could have learned of) the defect.

Source:
Supreme Court judgment 26 Cdo 527/2017 of 11 October 2018
Act No. 40/1964 Coll., Civil Code
Act No. 89/2012 Coll., Civil Code