Termination of a lease due to renovation work - Requirements for justification and compatibility with public law

Facts

This case concerns the termination of a lease justified by renovation work planned by the landlord. The tenants contested the validity of these terminations, citing a violation of the rules of good faith. The parties to the dispute are A. and associates (the tenants) against D. and E. (the landlords). The case was brought before the Swiss Federal Tribunal (civil appeal 4A_31/2014 of August 27, 2014).

Considerations

The Federal Tribunal examined two aspects to judge the validity of the lease terminations:

1. The compatibility of the renovation project with the applicable public law rules. The Tribunal considered that the tenants had failed to demonstrate that the project was clearly incompatible with the Vaud law on the demolition, transformation and renovation of residential buildings (LDTR/VD). Although the cantonal legislation is restrictive, it is generally not possible to predict with certainty that the administration will refuse the necessary authorization.

2. The degree of maturity and development of the renovation project at the time of the notification of the terminations. The Tribunal considered that the…