The 'Termination Due to Regret' in Commercial Leases under the Regime of Law 4242/2014 - The Role of the Lease Information Statement through Taxisnet

Legal Insight

June 2024

Marilena Giannika, Trainee Lawyer

Summary: Law 4242/2014 significantly amended commercial leases entered into after February 28, 2014, establishing a minimum duration of three years, regardless of the initial agreement. The option to terminate a lease under the "termination of regret" clause no longer exists, but the parties have greater freedom to modify the lease duration with a subsequent agreement, which must be evidenced by a document of certain date, including electronic documents via taxisnet. The declaration of the lease on taxisnet holds full probative value and ensures the alignment of the parties' will, making it a significant tool for either a lessee or lessor wishing to strictly enforce the agreed terms within the contract.

Law 4242/2014 (Government Gazette A’ 50/28.2.2014) radically changed the legal framework for commercial leases entered into after its effective date, specifically concerning the right of the contracting parties to terminate them. Specifically, Article 13(1) of this law states: “..leases falling under the scope of P.D. 34/1995 and entered into after the effective date of this law are valid for three (3) years, even if agreed for a shorter or indefinite period, and may be terminated by a subsequent agreement evidenced by a document of certain date. The termination must be in writing and its legal effects occur three (3) months from its notification.”

To further crystallize the legislator's intent for this provision, the explanatory report of the law states: “The three-year duration stipulated by the regulation does not bind the parties if they wish to agree on a longer duration, and with a subsequent agreement, the contract can be terminated before the three-year period ends. […] This way, the commercial property market can be revitalized, as parties can freely determine the lease duration without the risk of long-term property commitment [..]”.

Based on the above, the following conclusions can be drawn:

1. The "termination of regret" clause under the old law, i.e., the lessee’s ability to terminate the lease in writing after one (1) year from the contract’s start with the termination taking effect three (3) months after notification, no longer applies to new leases concluded after February 28, 2014.

2. The provision for termination of the contractual relationship for "important reason" remains, a possibility not further examined in this analysis.

3. The new legal framework leaves the regulation of commercial leases mainly to the contracting parties, setting a three-year ceiling on the contract duration regardless of the initial agreement, which can be overridden by a subsequent agreement evidenced by a document of certain date.

4. Therefore, the law sets the legal duration of any commercial lease at three years. For example, if two parties signing a private commercial lease agreement set the lease duration at one (1) year, the contract is legally considered to last three (3) years. The law's provision, as mentioned, can be overturned by a subsequent agreement of the parties. Problems arise, however, when the parties’ intent changes after the lease starts and before the three-year period ends.

For instance, if the lessee in the previous example changes their initial intent and now wants the contract to last three (3) years instead of the initially agreed one (1) year, under the current legal framework, there is no need to start negotiations with the lessor for an extension, as the lessee is covered by the legal duration, i.e., three years, regardless of their initial agreement.

That said, the importance of proving the subsequent agreement of the parties is indisputable, which, once made, is not bound by the three-year period regarding its duration. According to the law, a document of certain date is the means of proving the subsequent agreement. But what constitutes a "document of certain date"? Beyond traditional physical documents signed by the parties and dated, electronic documents gain particular interest in this issue. Specifically, the declaration of lease information submitted via taxisnet to the Independent Authority for Public Revenue (IAPR) will be examined.

The electronic form completed by the lessor on the IAPR website, the content of which is accepted by the lessee (submission of proposal - acceptance thereof), is a private (electronic) document under the relevant provisions of the Civil Procedure Code (CPC). Its probative value is regulated by Article 448§3 CPC, i.e., it produces full proof, like traditional (physical) private documents. When it comes to electronic documents, their probative value is particularly related to the ability to identify their sender. In the case of submitting the above form to IAPR, the contracting parties, i.e., the lessor and the lessee, use their personal access codes for the taxisnet to submit the electronic declaration on the IAPR website. These codes are issued officially, are unique to each person, and thus there is certainty that the electronic form's completion and acceptance of its content for forming the lease agreement using the codes was done by the contracting parties or authorized persons.

Therefore, when the lessee accepts the content of the electronic form with the lease terms, there is now a coincidence of the parties' will, indicating that the contract was concluded between the persons mentioned in the electronic form and with the essential terms listed in it.

Returning to the initial example, where two parties signed a private commercial lease agreement on 30/05/2024 and set the lease duration at one (1) year. Regardless of this agreement, the legal lease duration is three years. Thus, if the lessor does not wish to comply with the agreed terms, the lease can last until 29/05/2027. However, ten days later, on 09/06/2024, the lessor uploads the electronic lease declaration on the IAPR website with the terms listed in the lease (including the one-year duration). The lessee accepts this declaration three days later, on 12/06/2024. In this case, the declaration and acceptance took place after the initial contract was formed, serving as a new agreement. Furthermore, this agreement obtains a certain date (12/06/2024) with a later time and thus meets the legal requirements. Therefore, in this case, a one-year agreement is formed, which is considered a "subsequent agreement" required by law, valid even if it stipulates a period shorter than the legal duration.

In conclusion, Law 4242/2014 made a significant impact on the landscape of commercial leases, bringing radical changes for contracts entered into after February 28, 2014. The abolition of the "termination of regret" marks the end of the unilateral termination option by the lessee after one year. Now, the minimum duration is set at three years, offering both stability and flexibility in transactions. Flexibility is maintained as the duration can be modified by written agreement. Additionally, the declaration on taxisnet becomes crucial, strongly evidencing any subsequent agreements. Overall, Law 4242/2014 modernizes the framework, ensuring a balance between the interests of lessors and lessees, aiming for the smooth functioning of the market.