ANDORRA Law and Practice Contributed by: Elena Redondo, Albert Hinojosa and Marc Ambrós, Cases & Lacambra
Law, which provides the common regime for residential and commercial leases. 6.16 Effect of the Tenant’s Insolvency The Urban Rents Law does not expressly pro - vide for insolvency as a termination cause for lease agreements but states that a default in rent payment by the tenant constitutes a termination cause in favour of the landlord. However, a declaration of insolvency is not suf - ficient in itself as a termination cause for the specific lease agreement in case the insolvency situation of the tenant is rapidly reversed. Gener - ally, Andorran courts may refuse to uphold the termination of a contract based on a breach of obligations, undertakings or covenants, or on a change in circumstances that is merely acces - sory or complementary to the main undertak - ings, or based on an unreasonable, inequitable or bad faith interpretation of one of the events of default or changes in circumstance. 6.17 Right to Occupy After Termination or Expiry of a Lease Overall, the tenant does not have the right to continue to occupy the leased asset after the expiration or termination of a commercial lease. Nevertheless, the Urban Rents Law provides for a tacit renewal ( tàcita reconducció ), which takes place if the tenant stays in the leased asset more than 15 days after the termination of the lease agreement without express opposition from the landlord, whereby the lease agreement shall be automatically extended each month without any action by the landlord (or in the same term fore - seen for payment of the rent). The lease agreement may also be subject to tacit extension ( pròrroga tàcita ) for one year upon ter - mination unless the landlord or the tenant gives prior notice to the other party three months
before the termination or any extended period expiry date. To ensure that a tenant leaves on the date origi - nally agreed, landlords will usually conduct an ocular inspection (or similar inspection mecha - nisms as inventories) before the tenant leaves the real estate asset. 6.18 Right to Assign a Leasehold Interest A tenant who has concluded a lease contract for a definite period has the right under Andorran regulatory provisions to lease or sublease all or a portion of the leased premises in so far as there is written approval from the landlord. Likewise, there is a prohibition against subletting by the subleased. 6.19 Right to Terminate a Lease In addition to the events described in 6.13 Restrictions on the Use of Real Estate , breach by the tenant of the following obligations stated in the lease agreement entitles the landlord to terminate the lease agreement: • expiry of the lease agreement term; • loss or destruction of the real estate asset; • transfer or disposal after the expiry of the legal lease agreement term (four years); • mortgage foreclosure (when the leased agree - ment has been formalised after the creation of the mortgage without the mortgagor’s knowledge); • usufruct extinction (if the beneficial owner had granted the lease agreement and the tenant was aware of such circumstance); • when the real estate is declared to be in a state of ruin; and • compulsory expropriation.
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