The Supreme Court recently addressed the issue of whether or not a termination of lease of an apartment that the tenant used to provide short-term rentals through platforms such as Airbnb was justified.

The plaintiff had been a tenant in the apartment in question since 2009. Based on the lease agreement from that year, the apartment was to be used exclusively for residential purposes. The tenant was also entitled to sublet the apartment or part of it to other persons. In April 2020, the plaintiff asked the defendant to waive the rent due to “the current situation regarding the closure of the border and therefore the impossibility of accommodating tourists”. Following further communication between the parties and an inspection of the apartment, the defendant terminated the plaintiff’s lease pursuant to Section 2288 of the Civil Code, specifically for gross breach of an obligation under the lease, consisting of using the apartment for business purposes in violation of the lease agreement.

The tenant therefore decided to seek a determination of the illegality of the termination by the court. The District Court for Prague 1, which dealt with the action in question, then concluded that the notice was justified and contained all the statutory essentials. The reason for the termination was the fact that the plaintiff was not using the apartment for the agreed purpose, i.e. housing, but for short-term rental to tourists. Although the contract allowed him to sublet the apartment, short-term renting did not fulfil the purpose of “meeting housing needs” and such renting contradicted the purpose set out in the contract, since the prohibition against such renting was, according to the court, already apparent from the wording of the contract itself.

The plaintiff appealed, but the Municipal Court affirmed the District Court’s decision. In addition to the above, it added that “the need for housing does not consist only in overnight accommodation, but in the entire comprehensive provision of human needs in their material and mental aspect. Services such as Airbnb should then be considered accommodation services. According to the Court of Appeal, the defendant could even have given notice to the plaintiff pursuant to Section 2291 of the Civil Code without notice, for which reason the defendant need not have first invited the plaintiff to remedy the situation using notice pursuant to Section 2288, as she did in this case.

The plaintiff was not satisfied with the decision of the Municipal Court and filed an appeal to the Supreme Court. The majority of the appeal was not examined in detail, as the lower courts had not departed from established decision-making practice. It further summarised that the termination was not contrary to good morals and that the termination did not have to be preceded by an invitation to remedy the defective condition. It looked in greater detail at the question of whether or not renting out an apartment through platforms such as Airbnb constitutes use of the apartment contrary to the purpose of the lease. In the opinion of the Supreme Court, the law sets out the obligations of the tenant, the breach of which may constitute a ground for termination. One of these obligations is the obligation to use the apartment properly and in compliance with the lease agreement.

Particularly serious violations of this obligation include renting out apartments to third parties via platforms such as Airbnb. “The prerequisite for the protection of the tenant is that he uses the rented apartment or house to “provide for housing needs...” – i.e. the aforementioned comprehensive provision of human needs in their material and mental aspect. The legislation of the Civil Code does not consider “recreation or other apparently short-term purpose”, i.e. a situation where the person accommodated meets his “housing needs in another way (he has a home elsewhere)” to be housing.

This is a major decision of the Supreme Court on the issue of the provision of apartments under services such as Airbnb and the conflict of these services with the purpose of the lease justifying its termination. It is particularly relevant to practice in that it makes it clear that short-term rentals are incompatible with the purpose of rentals intended for residential use, unless the contract expressly provides otherwise.

This decision may be one of the first steps towards establishing balance in the housing market and the market for accommodation and other recreational services.