When is a rehire fee due?

When a landlord asks the court to dissolve the lease to the detriment of the tenant because, for example, the tenant has seriously failed to fulfill its obligations, the former usually also asks for a re-leasing fee. This is compensation owed to the landlord to offset the potential loss of rental income resulting from the immediate termination of the lease.

The reasoning is that only from the moment the court actually issues the dissolution can the landlord look for another tenant. Because it may take some time for a new tenant to move in, the court usually orders the tenant to pay damages. It is equal to the number of months it takes on average to find another tenant and for the landlord to enjoy rental income again. In residential leasing, a re-leasing fee of about three months’ rent is common because most judges say this is a reasonable period within which another tenant can be found. Thus, the re-leasing fee serves to compensate for the missing rental income during the search for another tenant.

It is compensation for damages suffered by the landlord, which is a result of the tenant’s fault. If the lease is not terminated due to the tenant’s fault, then the landlord would also not have suffered damages (loss of rental income).

Yet a re-hiring fee is not always due, as the May 20, 2021 ruling by the Justice of the Peace of Zoutleeuw shows.

The facts

The apartment lease begins March 1, 2016 at a base rent of 590 euros. In August 2020, the tenant pays 225.50 euros short of rent. From January 2021, he no longer pays any rent at all, so that by the end of May 2021, rent arrears reached 3,175.55 euros.

Meanwhile, the tenant terminated the contract by May 31, 2021, and vacated the apartment. The keys were deposited with the real estate agent. The tenant did leave some mess behind.

The landlord claims dissolution, eviction within twenty-four hours of the service of the judgment, payment of the arrears of rent, of an occupancy fee per month started from June 1, 2021 at the rate of 590 euros per month and on top of that of a re-letting fee of 1,650 euros.

The verdict

First, the justice of the peace makes it clear that even if the tenant has given notice, the landlord can claim rescission even during the current notice period. Even then, the tenant must fulfill its obligations. The court concluded that persistent non-payment of rent was indeed grounds for rent termination.

But the fact that the lease was already terminated by the tenant does affect the claim for the re-leasing fee.

A re-leasing fee, which is payable only in the event of a lease termination for breach of contract by the tenant (and therefore not in the event of a lease termination by notice), is intended solely to compensate the landlord for the loss of rents.

“A re-leasing fee of about three months’ rent is common because, according to most judges, this is a reasonable period within which another tenant can be found.”

Given the notice given by the tenant, the landlord knew since the beginning of the notice period that he would have the property at his disposal as of June 1, 2021, and could have already started looking for a new tenant in advance. Thus, the lease termination barely a dozen days before the expiration of the notice period does not cause the landlord a loss of income due to the fact that, as a result of the lease termination, he must unexpectedly look for a new tenant. And so the justice of the peace correctly dismissed the claim for payment of a three-month rent re-leasing fee.

Source: United Owners, Owners Magazine No. 506 – May 5, 2023


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