The early termination of a lease agreement for non-residential premises represents in practice a situation that may significantly disrupt the economic stability of the landlord. Rent is usually one of the principal sources of income on which the landlord relies when financing operations, maintenance, repayment of investments or planning further business activities. Lease relationships are typically conceived as long-term, often for a fixed term, and their early termination may therefore result not only in an immediate loss of income, but also in additional costs associated with finding a new tenant, modifying the premises or administrative burdens. In practice, the question therefore arises whether, after termination of the lease, the landlord may claim damages in the form of lost rent for the period that would otherwise have continued had the lease relationship persisted.
This question arises in cases where the tenant breaches its obligations – for example, fails to pay rent, uses the premises contrary to the agreement, does not allow access to the premises, or otherwise violates contractual arrangements. The landlord is then faced with the decision whether to terminate the lease relationship or to insist on its continuation and seek performance of the tenant’s obligations. In practice, the idea often appears that if the tenant breaches the agreement and the landlord terminates the lease, the landlord automatically becomes entitled to compensation for lost rent until the end of the originally agreed lease term, or at least to compensation for related damage resulting from the early termination of the agreement. However, the situation is considerably more complex. It is decisive who terminated the lease, why this occurred, and whether there is an actual causal link between the breach of the tenant’s obligations and the occurrence of damage.
The purpose of this article is therefore to define the conditions under which the landlord may assert a claim for lost rent as damages and to identify the limits established by judicial practice. We will focus on an analysis of loss of profit, on the examination of causation in the context of lease termination, and on distinguishing between situations where the lease ends by the will of the tenant and where, conversely, it ends by the will of the landlord. Particular attention is devoted to the case law of the Supreme Court, which in this area provides relatively clear guidance, both as regards the existence of the claim itself and as regards its scope and temporal limitation.
Lease of Non-Residential Premises
A lease of non-residential premises is a contractual type characterised by broader contractual autonomy of the parties than a lease of an apartment or house. The tenant is typically an entrepreneur who uses the premises for the performance of business activities, and the lease agreement is usually the result of individual negotiation. In practice, it is common for the contracting parties to stipulate specific obligations of the tenant and to provide that their breach entitles the landlord to give notice or withdraw from the agreement. However, such arrangements in themselves do not mean that the landlord automatically has a claim for compensation for lost rent for the period following termination of the lease, as explained below.
The conclusions set out in this article also apply to the lease of an apartment or house, where the tenant is “de lege” afforded significantly greater protection. In the lease of non-residential premises, there is much greater scope for contractual arrangements that may influence the manner of termination of the lease. Nevertheless, general rules on damages still apply, determining whether the landlord may claim compensation for lost rent after termination of the lease.
A lease of non-residential premises differs from a lease of premises intended for residential use primarily in that the tenant is not protected by special legislation limiting the landlord’s ability to terminate the lease relationship. The parties have greater freedom in stipulating grounds for notice, resolutive conditions or other mechanisms allowing termination of the lease, not only in cases of breach of the tenant’s obligations. This contractual freedom is also reflected in the fact that lease agreements frequently contain detailed mechanisms for addressing the tenant’s default, regulating sanctions, allowing immediate termination of the lease or providing for automatic termination of the lease relationship upon fulfilment of agreed conditions.
At the same time, it must be emphasised that a lease of non-residential premises is typically concluded for business purposes, which corresponds to a higher degree of responsibility on both sides. The tenant bears greater risk associated with the use and operation of the premises, while the landlord may expect stable income, which is often crucial for financing its own obligations and maintaining operational cash flow. It is precisely this economic interdependence that leads the contracting parties to devote greater attention to the regulation of rights and obligations, particularly as regards the consequences of breach of the agreement.
Lease agreements for non-residential premises also frequently contain provisions requiring the tenant to carry out certain modifications, maintain the premises in operational condition or comply with specific operating conditions. In the case of a lease of non-residential premises in shopping centres, lease agreements often also include an obligation for the tenant to comply with the landlord’s operating rules. Breach of these obligations may have more serious consequences than in the lease of premises intended for residential use, as it may affect not only the subject matter of the lease itself but also the business activities of the landlord or other tenants in the building. For this reason, the contractual regulation tends to be considerably more complex and stricter.
At the same time, it should be noted that despite the broad contractual autonomy, a lease of non-residential premises remains subject to the general principles of civil law, in particular the principle of good faith, the prohibition of abuse of rights and the duty to prevent damage. These principles are reflected in the assessment of the validity of contractual provisions and in the subsequent evaluation of whether and to what extent the landlord may claim damages.
Possibilities of Claiming Lost Rent
Lost rent is a typical example of loss of profit within the meaning of Section 2952 of the Civil Code. This provision stipulates that damage includes not only actual damage but also loss of profit, i.e. the pecuniary benefit that the injured party would have obtained in the ordinary course of events had the damaging event not occurred.
In general, such loss of profit must be specific and not merely hypothetical. It is not sufficient to claim that the injured party “could have” achieved certain income; it must be demonstrated that such income would in fact have been achieved had the damaging event not occurred. The amount of loss of profit depends on the specific possibilities of the injured party, not on usual market conditions. If the injured party was deprived of the opportunity to lease the property to a specific interested party, the calculation is based on the amount that would actually have been received, not on the usual rent. This conclusion is also confirmed by the case law of the Supreme Court, in particular the judgment of the Supreme Court of 14 October 2004, File No. 25 Cdo 540/2004, which addresses the issue of loss of profit from leasing to a specific tenant. The Supreme Court emphasised that loss of profit must be proven in a specific amount and cannot be derived from general market conditions.
Such specific rent amount would be relatively easily determined on the basis of the lease agreement. However, in general, for the tortfeasor to be obliged to compensate damage, there must be a causal link between its conduct and the damaging consequence. It is not sufficient that the tenant breached its obligations; it must be proven that this breach is the cause of the damage.
Termination of the Agreement by the Tenant
If the lease is terminated by the tenant, it is first necessary to distinguish whether this is done properly, i.e. in a manner permitted by the agreement or by law, or whether the termination is unlawful. In the case of proper and valid notice by the tenant, the landlord is not entitled to lost rent for the period following termination of the lease, because the termination of the lease relationship is the result of the legitimate exercise of the tenant’s right. However, if the tenant terminates the lease relationship contrary to the agreement or without legal grounds, such conduct may be qualified as a breach of obligation giving rise to liability for damages in the form of loss of profit represented by lost rent.
Even in such a case, however, lost rent cannot automatically be awarded until the end of the originally agreed lease term. Case law emphasises that loss of profit may accrue to the landlord only for a certain period, and this period must correspond to the time during which the landlord objectively could not replace the lost income. It is decisive when the landlord could bring the premises into a condition allowing further lease and when it could realistically find a new tenant. Courts rely on the injured party’s duty of prevention, according to which everyone is obliged to take steps to mitigate damage. If the landlord could have reduced the damage – for example by actively seeking a new tenant or carrying out necessary modifications to the premises – compensation cannot be awarded for the period during which it could have done so but failed to do so.
This principle was expressly confirmed, for example, in the decision of the Supreme Court of 30 September 2019, File No. 25 Cdo 2214/2018. The Supreme Court emphasised that loss of profit may accrue for a certain period, but this period cannot be unlimited. It is decisive whether and when the injured party is capable of replacing the lost income by another source. If the landlord has the possibility within a reasonable time to bring the premises into a condition suitable for lease and to find a new tenant, lost rent cannot be awarded for a longer period.
In practice, this means that the landlord may claim lost rent only in a very limited range of situations, and even in such cases the landlord cannot passively wait and rely on the court awarding lost rent for the entire period until the end of the originally agreed lease term. On the contrary, the landlord must actively prove that it took steps to mitigate the damage – typically that it began seeking a new tenant without undue delay, published an offer to lease, carried out necessary repairs or modifications of the premises and took other steps aimed at restoring rental income. If, for example, the landlord took no steps for several months to occupy the premises, the court will not award lost rent for that period, because from a certain point the damage arose due to the landlord’s own inactivity. In other words, the landlord must be able to demonstrate that the period for which compensation is claimed was genuinely a period during which it objectively could not lease the premises, not a period during which the premises remained vacant merely as a result of its passivity. The specific length of such period will always depend on the circumstances of the particular case.
Termination of the Agreement by the Landlord as a Result of the Tenant’s Conduct
A completely different situation arises where the tenant breaches obligations under the lease agreement, but the lease is terminated by the landlord. Case law has repeatedly addressed this issue and has reached a consistent conclusion. If the landlord terminates the lease agreement by notice or other active conduct (even due to the tenant’s breach of obligations), the cause of the termination of the lease relationship is the landlord’s decision itself, not the tenant’s breach of obligations. Lost rent for the period following termination of the lease is therefore not in a causal link with the tenant’s breach of obligations. This conclusion is confirmed, for example, by the judgment of the Supreme Court of 31 March 2009, File No. 29 Cdo 407/2007, where the Supreme Court expressly stated that the cause of the damage is not the tenant’s breach of obligations but the landlord’s decision to terminate the lease relationship.
The same principle was confirmed in the resolution of the Supreme Court of 14 February 2023, File No. 23 Cdo 838/2022. The Supreme Court stated that if the injured party itself chose to terminate a fixed-term agreement by notice, loss of profit for the period after termination of the agreement is not in a causal link with the breach of obligation by the other party. The fact that after termination of the agreement it was no longer entitled to the agreed payments is a consequence of its own decision to terminate the agreement, not of the tenant’s breach of obligation.
For practice, the key conclusion is therefore that the landlord cannot combine two contradictory steps: on the one hand exercising its right to terminate the lease relationship and, on the other hand, claiming compensation for the period during which the agreement would otherwise have continued had it not terminated it itself. Once the landlord actively chooses termination of the lease, this decision becomes an independent cause of the termination of the lease and, consequently, the reason why the landlord no longer receives any rent.
At the same time, this means that landlords must carefully consider the economic consequences of their decision when deciding whether to terminate the lease. If the tenant’s breach of obligations is remediable, short-term or does not represent a fundamental threat to operations, it may be more advantageous for the landlord to insist on continuation of the lease and seek performance of obligations rather than terminate the lease and subsequently bear the risk of unpaid rent. This naturally applies on the assumption that the tenant, although breaching contractual obligations, continues to pay rent.
Similar conclusions may be reached in the case of termination by agreement of the contracting parties, which also includes the will of the landlord. In such a case, it is appropriate to regulate within the termination agreement the consequences and any financial compensation for the landlord for early termination.
With regard to the autonomy of the will of the contracting parties in the context of a lease of non-residential premises (particularly in business leases), it can only be recommended to agree on detailed rules that compensate the landlord in such cases specifically for lost rent, additional administrative costs or other damage and difficulties associated with the early termination of the lease agreement due to the tenant’s breach.
Conclusion
If the lease ends by the will of the landlord – even if motivated by the tenant’s breach of obligations – the cause of the damage is the landlord’s decision to terminate the lease relationship. In such a case, lost rent cannot be considered damage caused by the tenant and the landlord is therefore not entitled to corresponding compensation.
Conversely, in situations where the lease ends due to unlawful conduct of the tenant or its breach of obligations, the landlord may acquire a claim for compensation for lost rent (loss of profit) or other damage. However, even here the claim is not automatic. In every case, a direct causal link between the tenant’s conduct and the occurrence of the damage must be proven.
An important role is also played by the landlord’s duty of prevention, under which the landlord is obliged to take steps to mitigate the damage arising. Compensation cannot therefore be awarded for a period during which the landlord failed to take sufficient preventive steps to avert further damage.
If you have any questions concerning lease relationships, civil law or other legal matters in general, please do not hesitate to contact us.
Mgr. Ondřej Růžička, attorney-at-law – ruzicka@plegal.cz
Mgr. Karel Janeba, junior lawyer – janeba@plegal.cz
19. 2. 2026