Facts
On 1 September 1994, Z. rented the X. property in Lucerne to B. AG for a period of 10 years. On 21 February 1995, with Z.'s agreement, the property was sublet to Y. The lease agreement provides that the tenant is responsible for ensuring that artisans and contractors do not register liens for construction work. If this occurs, the tenant must ensure that these liens are immediately cancelled at their expense.
Due to a renovation project of the property by Y., the president of the Lucerne district court authorized the provisional registration of liens for construction work on the property. Z. asked B. AG to take measures to cancel these liens, but B. AG did not respond. Z. then terminated the lease on 7 May 1996, citing article 257f al. 3 CO.
B. AG contested this termination before the conciliation commission, which decided that the termination was null. The Lucerne district court then dismissed Z.'s request for eviction of B. AG. B. AG appealed this decision to the federal court, which dismissed the appeal.
Considerations
The federal court considered that article 257f CO does not apply to the termination of a lease for non-payment of construction costs. This article concerns the tenant's obligations regarding the care and respect of the rented property, and not contractual obligations in general.
However, the court also considered that B. AG had breached the lease agreement by not paying the construction costs, and that Z. had the right to terminate the…