REALWorld Law

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

If the contract is limited to a certain time, the tenant has no rights to continue to occupy the real estate after expiry of the lease. If the tenant wishes to continue to occupy the real estate, the parties must re-negotiate, but the landlord is not obliged to do so. However, if the tenant continues to occupy the property with the landlord’s knowledge, without the landlord has requested the tenant to vacate the lease, the lease continues on the same terms as the expired contract — but now the lease is not limited in time. 

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

If the landlord and the tenant have agreed on a time-limited contract, the landlord is not obliged to act. The tenant on the other hand is obliged to leave the lease on the date originally agreed on. If the tenant continues to occupy the property with the landlord’s knowledge, without the landlord having requested the tenant to vacate the lease, the lease continues on the same terms as the expired contract — but now the lease is not limited in time.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The lease can at any time be terminated by landlord if tenant is in breach of contract.

If tenant is not in breach of contract the following conditions apply:

• If the lease term is not fixed (unlimited), the landlord can only terminate the lease under the (mandatory) provisions in the Commercial Rent Act.
• If the lease term is fixed, the landlord cannot terminate the lease unless it is agreed between the parties. Even though such agreement has been made the landlord may - during the fixed term – still only terminate the lease under the (mandatory) provisions in the Commercial Rent Act.

Normally, a landlord will seek a court order permitting the recovery of possession of the premises and this procedure can take up to a year, sometimes even more.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Generally, there are no third parties with the ability to terminate the lease, but in some cases the lease can be terminated in connection with an expropriation.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The Commercial Rent Act does not address the issue and it is left for the parties to decide the security (freedom of contract). Usually a cash deposit for an amount equal to three to 12 months’ rent is provided.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The contract will normally restrict the use of the premises to a particular use.

The tenant will also be restricted by planning law to a use which has been approved by the planning authority or which corresponds to past uses of the property.

The Commercial Rent Act also regulates the tenant's use. As a principal rule, the tenant must treat the leased premises properly and a tenant is responsible for damage caused by its own improper behaviour or that of its personnel or other persons, to whom the tenant has granted access to the leased area or property.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Most contracts limit the tenant's rights to alter or improve the premises. Significant alterations normally require the landlord's prior consent in contrary to certain customary installations, alterations and displaying of signs.

Further, most contracts include a right, for the landlord to require the alterations to be removed/re-established at expiry of the lease agreement.

In general, the tenant is obliged to return the premises in same condition as they were in when they were taken over.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The law allows a transfer of the rights under the contract to a third party. A landlord can prevent such transfer only if it can raise serious objections to the suggested third party. The relevant provisions are non-mandatory.

The landlord can, in the contract, require that the rights are not transferred to third parties or that the rights can be transferred to a third party only when the landlord has approved the transfer.

The law does not grant the tenant the right to sublet, however, the parties can agree in the contract that the tenant has such right.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Generally, the parties will agree on a rent review mechanism, for example indexation, but it is possible to agree that the rent will be fixed for the entire rent period.

The Commercial Rent Act also contains detailed provisions regarding adjustment in line with market rents if either party claims this right. This will be based on a market rent review. The relevant provisions are non-mandatory.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Most commonly by indexation.

Annually – by reference to the net price index published by the Public Administration (often including an agreed minimum and/or maximum percentage), or by a fixed percentage.

Market rent review – based on an assessment by independent experts.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

VAT at 25% will be payable only if the landlord opts to charge VAT.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

There are several options available to the landlord depending upon the specific circumstances and what the landlord wants to achieve.

Demand for payment, termination (for breach) and bailiff's court: The landlord is entitled to terminate the lease (for breach) as a consequence of late payment if the tenant has not paid the outstanding amount within three days of having received a written demand for such payment.

The landlord's demand must be made after the last due date for payment, include a detailed statement of the owed amount and must expressly specify that the lease may be terminated if the outstanding rent is not paid before the expiry of the time limit.

If the tenant does not pay within the specified period and the landlord terminates the lease, the tenant must vacate immediately. However, a landlord often grants the tenant at least one week to vacate.  

If the tenant does not vacate voluntarily, the landlord can bring the case to the bailiff's court to have the tenant evicted from the premises.

Pursue guarantor: The landlord may be able to recover rent arrears and other sums due under the lease from any guarantors under the lease either by way of a contractual guarantee or under the privity of contract rules, subject to certain limitations.

Court proceedings to recover debt: The landlord can issue court proceedings against the tenant to recover rent or other sums due under the lease. The process can be expensive and will often take 1-2 years if the so-called ‘small claims process’ is not applicable (claims of no more than DKK 50,000). The tenant may not feel any impetus to pay the arrears in this period. Thus, serving a demand for payment and specifying that the lease may be terminated if the outstanding rent is not paid before the expiry of the 3-day time limit, may be more appropriate.

Insolvency proceedings: If the tenant has failed to pay rent or other sums due under the lease, the landlord may commence insolvency proceedings, provided that the tenant is considered ‘insolvent’ in accordance with the Danish Bankruptcy Act (unable to meet its liabilities as and when they fall due, unless such inability must be deemed to be only temporary). The landlord should as a main rule terminate the lease due to failed payment and demand that the tenant vacates before potentially commencing insolvency proceedings.

 

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

A deposit will normally be required.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The landlord is obliged to repair and maintain areas used by multiple occupiers and therefore maintenance of these areas is usually carried out by the landlord; however, the parties are free to agree otherwise including as to who pays the costs.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Under the Commercial Rent Act, the landlord is obliged to repair and maintain the property internally as well as externally. The interior maintenance obligation is usually transferred to the tenant under the contract.

Exterior maintenance is usually carried out by the landlord.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Telecommunications are normally paid for directly by the tenant. Other utility costs are divided between the tenants in proportion to the size of their unit in relation to the total area of the building, unless it is agreed in the contract that some or all of the utility costs are not paid separately but are contained in the rent.

Last modified 13 Mar 2025

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

The landlord usually pays for insuring the real estate (the building). Usually fire, storm, water damage, fungal damage and electrical faults are covered. The parties are free to agree otherwise including as to who pays the cost. The costs of the property insurance are most often included in the joint operating expenses which are divided between the tenants in proportion to the size of their unit.

Last modified 13 Mar 2025