The improvement of the leased property, in legal terms, means expenditures incurred by the tenant during the term of the tenancy agreement, which the tenant was not obliged to make, and which increase the value of the leased property at the time of its return to the landlord. In theory, the landlord’s consent is required for such expenditures. However, the granting or withholding of such consent is unfortunately of little significance due to the lack of any effective sanction against the tenant. This is because, in the case of improvements made to immovable property, reference must be made to Article 676 of the Polish Civil Code, which due to the settlement mechanism provided by the legislator appears to result in a somewhat unfair outcome for the landlord.

 

Pursuant to Article 676 of the Civil Code, if the tenant has improved the leased item, the landlord, in the absence of a contrary agreement, may, at his discretion, either retain the improvements against payment of an amount corresponding to their value at the time of return, or demand restoration of the previous condition. Similar principles apply in the case of residential premises. According to the Act on the Protection of Tenants’ Rights, Municipal Housing Stock, and the Amendment of the Civil Code (hereinafter: ‘Act’), although the tenant is indeed prohibited from making improvements without the landlord’s consent, Article 6e.2 of the said Act provides that the landlord may demand the removal of improvements introduced by the tenant without consent and restoration of the original condition, provided it does not damage the substance of the premises. Alternatively, the landlord may retain such improvements, reimbursing their value taking into account depreciation as at the date of the premises being vacated.

 

Nevertheless, the lack of the landlord’s consent to the improvements still triggers the obligation to pay the tenant the value of the improvements if the landlord does not choose or is unable (for technical reasons) to demand restoration of the previous condition. In cases where restoring the original condition is practically impossible, the landlord is compelled to retain the improvements introduced unilaterally by the tenant, and – what is particularly striking – must compensate the tenant for their value. Such a solution infringes upon the landlord’s ownership rights and leads to a situation in which the landlord’s refusal to consent to certain acts may be disregarded by the tenant without any adverse consequences (in the event that restoration is impossible).

 

The provision of Article 676 of the Civil Code may therefore cause significant inconvenience for landlords. It is worth stressing that the concept of the possibility of removing improvements without damaging the substance of the premises should be interpreted broadly so as to facilitate the landlord’s exercise of their right to demand removal of the improvements and restoration of the original condition.

 

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Our law firm is experienced in civil litigation, a practice supported by real estate expertise and a practical approach to legal matters. For many years, I was responsible for lease and rental agreements for the mobile network operator ERA (now T-Mobile) in western Poland, and I have a thorough understanding of lease-related matters.

This article has its text in Polish.