Rights and obligations of landlords in the Principality of Monaco

 

 

The Monegasque rental market is unique, necessitating a deep understanding of the rights and obligations of landlords and tenants, regardless of the property's use—residential in the free or regulated sector, office, or commercial.

 

A landlord, whether an individual or legal entity, owns a property offered for rent and becomes contractually bound to a tenant in exchange for rent and service charges. The lease agreement is a vital document that outlines the rights and obligations of both parties. Depending on the lease type, rental terms may vary in specific aspects.

 

I. Landlord's Rights

1. Free-Market Residential Leases

Properties in this category are predominantly residential units in buildings constructed after 1st September 1947. These can be rented freely, irrespective of the tenant’s nationality. Lease duration, rent amounts, and revision terms (typically annual, on the first day of a new lease period) are determined at the landlord’s discretion.

 

Payment of Rent, Charges, and Proper Use of Premises

The Monegasque Civil Code stipulates tenants’ primary obligations under free-market leases. Tenants must use the property as specified in the lease agreement and pay rent and charges regularly as agreed (Article 1568). This constitutes the landlord’s fundamental right.

In case of non-compliance, landlords may seek lease termination and tenant eviction through Monaco’s courts. The winter eviction ban does not apply in Monaco. Breach also applies if the tenant changes the property’s use or damages it (Article 1569) or fails to furnish the premises adequately or provide suitable guarantees for rent payment (Article 1592).

Landlords must always pursue legal channels for eviction, initiated by filing a motion through a Monegasque lawyer. The court orders the termination of the lease and eviction. Once executed, the tenant has 15 days to appeal and an additional month to vacate. Separate legal action may be taken to recover unpaid rent and enforce seizure of the tenant’s assets.

 

Right to Request a Security Deposit

Although not mandatory, landlords can safeguard against payment defaults or property damage by requiring a security deposit, typically equivalent to three months' rent and charges, adjustable during rent indexation. The deposit is not considered an advance on rent.

It must be returned to the tenant within two months of the lease termination, less any deductions for outstanding amounts or repair costs.

 

Right to Access the Property

This right applies throughout the lease term, primarily during property sales or tenant changes. The landlord may also arrange visits by notifying the tenant in advance.

Both parties must agree on visit timings. If the tenant obstructs access, the lease may stipulate a penalty fee calculated daily for missed visits.

 

The Right to Reclaim Use of the Property on Expiry of the Lease

The landlord may terminate the lease without reason, provided the terms of the lease are respected, usually with a three-month notice before expiration. However, this rule excludes leases governed by Laws No. 1,235 and 887.

 

The Right to Maintenance of Property

The lease stipulates that the Tenant must maintain the rented premises and keep all installations in excellent condition. At the end of the lease, the Tenant must return the property in a clean, well-maintained, and repaired state, carrying out any necessary replacements at their own expense, supported by an invoice from a specialist company.

If electrical appliances are provided, repairs or replacements with equivalent models are also the Tenant’s responsibility, except in cases of obvious obsolescence.

Minor day-to-day repairs are the Tenant’s responsibility, including locks, taps, appliances, lighting, switches, window fastenings, repainting kitchens or bathrooms, unblocking sinks and toilets, maintaining drains, and repairing tiling. These tasks must be completed promptly and at the Tenant’s expense. However, the Tenant is not liable for repairs arising solely from obsolescence or force majeure, as per Article 1594 of the French Civil Code.

At the lease’s end, and if the contract allows, the Lessor may require the Tenant to restore the property to the condition recorded in the initial inventory of fixtures. Article 1570 of the Monegasque Civil Code states that the Tenant must return the property as received, except for damage caused by obsolescence or force majeure.

For example, if the property was freshly repainted or in perfect condition with treated floors, the Tenant must return it in the same state at their expense, regardless of the lease duration.

 

2. Protector Sector Leases

Landlords must adhere to specific obligations to ensure the validity of their lease when owning properties in the protected sector. This category includes most apartments in "older" buildings constructed before 1st September 1947. These properties have been subject to post-war regulations aimed at safeguarding the rights of tenants recognised as protected persons. The protected sector is governed by two coexisting laws: Law No. 1,235 and Law No. 887.

 

Law No. 1,235 (28th December 2000)

This law regulates rent levels, rental conditions, and tenant rights. Properties within its scope can only be rented to individuals registered as protected persons with the Housing Department, in accordance with Articles 3 and 4 of the law. The law primarily aims to provide housing opportunities in Monaco for locals and long-term residents.

Landlords are obligated to offer tenants six-year leases, renewable for additional six-year periods. Tenants may terminate these leases annually, while landlords may only terminate them with a minimum of six months' notice before the end of the lease term. Termination is allowed under specific circumstances, such as:

1. Personal or family use of the property, including occupation by the landlord, their ascendants, descendants, spouse, siblings, or their descendants, as provided by law.
2. Redevelopment, such as demolition for reconstruction, extension, or conversion to create new habitable spaces, as well as major repairs or improvements rendering the premises uninhabitable during the works

 

In such cases, the landlord must provide the tenant with alternative accommodation for the remainder of the lease term, in a property of comparable condition located within Monaco. The rent for this alternative property cannot exceed the rent specified in the original lease.

If the property becomes vacant, landlords must declare this to the Housing Department within one month of the vacancy. Failure to declare within three months may result in a fine of €50,000. Unless justified by valid reasons such as renovations or exercising the right of repossession, the property must be reoccupied within three months of the declaration. A subsequent declaration of rental or free occupation must also be submitted.

The rent is not freely determined by the landlord but is fixed in consultation with the Housing Department under the authority of the Government, based on a reference scale.

 

Law No. 887 (25th June 1970)

This law was the first step towards liberalising the protected housing sector. It applies to higher-quality properties or those historically occupied by their owners.

Properties under this law may be rented, in addition to protected persons, to ascendants or descendants of the landlord or their spouse, as well as to individuals who have been residing in Monaco for at least five years and working there for over six months, or to those employed in Monaco for at least five years.

Landlords are required to offer six-year leases, renewable for additional six-year periods. Tenants may terminate these leases annually, but landlords may only terminate them at the end of the lease term without providing a reason. This contrasts with the requirements of Law No. 1,235. Following termination, landlords may choose to relet the property, occupy it themselves, or leave it vacant—an option not permitted under Law No. 1,235.

If the property becomes vacant, landlords must declare the vacancy within eight days and submit a rental or occupancy declaration as soon as it is reoccupied.

Rent levels in this sector are freely set by the landlord.

 

II. Obligations of Landlords in the Protected Sector

The lease must also describe the lessor's obligations towards the lessee, many of which are set out in the Monegasque Civil Code.

 

Adherence to Property Use

The lessor must respect the use of the leased premises, as set out in the co-ownership regulations. For example, a residential lease does not allow the landlord to rent the premises for office use, unless the lease is for dual usage. In this case, any commercial activity is prohibited, as is the exercise of any profession, even a liberal profession.

 

Ensuring Structural Intergrity

Closing and covering is the set of elements (construction products) that make a building watertight and prevent water and air from passing through. It can also be referred to as making the building watertight and airtight.

This involves, but is not limited to, the following:

• the shell of the building and its accesses are in a good state of repair and watertight;
• the external joinery and roofing with its fittings and accessories provide protection against water ingress;
• the restraining structures (railings) in the dwelling and its accesses (windows, balconies, staircases, etc.) must be in a condition appropriate to their use.

 

Maintenance Obligations

Under Article 1559 of the Monegasque Civil Code, landlords/lessor must:

1. Deliver the property in a condition suitable for the intended use.
2. Maintain the property throughout the lease term to serve its intended purpose.
3. Allow the tenant peaceful enjoyment of the property during the lease term.

 

Additionally, Article 1560 requires landlords to ensure the property is in good repair at the start of the lease and to carry out necessary repairs during the lease, except for minor repairs, which are the tenant's responsibility. Major repairs, such as restoring walls, beams, or entire roofs, remain the landlord’s responsibility.

Landlords cannot, under Article 1563, alter the property’s form during the lease term.

 

Non-Occupying Landlord Insurance

Landlords must also protect their property, neighbours, and themselves against risks by subscribing to non-occupying landlord insurance, as mandated by Law No. 1,531 (29th July 2022). This insurance covers risks not included in the tenant's mandatory insurance and also protects against tenant-caused damages.

 

 

An in-depth understanding of the rights and obligations within Monaco’s protected rental sector is essential for effective property management.

Barnes – Valeri Agency has a comprehensive knowledge of the legal intricacies surrounding both free-market and protected rental sectors, providing expert representation to landlords through all stages of leasing, from marketing to management.