Joint and several liability in rental agreements is an attractive form of security for landlords. What rights and obligations arise from this?
Joint and several liability in rental agreements is a common form of contract in Switzerland, especially for shared flats or when several people rent business premises together. But what exactly does this term mean and what are the consequences for the parties involved? This article highlights the most important aspects of joint and several liability in tenancy law.
Renting office or commercial space together often offers financial and practical advantages. Companies can share costs and benefit from larger, more attractive premises that would be unaffordable for a single tenant. Couples or partners in a shared flat experience similar advantages in their private lives. However, signing a joint tenancy agreement usually involves joint and several liability, a legal construct with far-reaching consequences. For landlords, joint and several liability in the rental agreement offers increased security, as several parties are liable for the fulfilment of the contractual obligations. For tenants, however, it means mutual responsibility, which requires a high degree of trust and clear internal agreements. The key aspects of joint and several liability are explained in detail below.
In order to understand the scope of joint and several liability, a clear definition is first necessary. In the Swiss Code of Obligations (CO), joint and several liability is regulated in Articles 143 ff. It states that several debtors (in this case the tenants) are liable to the creditor (the landlord) for the entire debt in such a way that the creditor can demand performance from each individual debtor in whole or in part. All debtors remain liable until the entire claim has been settled.
In concrete terms, this means that if several people sign the contract as main tenants, they become joint and several debtors. In this case, the landlord has the right to demand full performance of all contractual obligations – in particular the payment of the entire rent and ancillary costs as well as liability for any damage to the rented property – from each individual tenant. It does not matter how the tenants have divided the costs internally or who caused any damage. The landlord can turn to the tenant who appears to be the most solvent or easiest to reach. This provision primarily serves to protect the landlord, who thus minimises their risk of non-payment. Only when the landlord has been fully satisfied are all joint tenants released from their external obligation.
Joint and several liability means that each individual tenant who has signed the joint and several liability tenancy agreement is liable for the payment of the entire rent, not just their supposed share. For example, if one tenant in a three-person flat share does not pay their share, the landlord can demand the outstanding amount from the other two tenants. They are then obliged to pay the missing amount in order to avoid rent arrears and possible legal consequences such as termination of the tenancy agreement.
This joint and several liability for the rent exists regardless of whether a tenant actually still uses the premises. Even if a joint tenant moves out prematurely without the tenancy agreement being formally amended, their liability for the rent and other obligations under the agreement remains until the tenancy is properly terminated or they are legally released from the agreement. This underlines the need for clear internal agreements between joint tenants and careful consideration of the situation before entering into a joint liability tenancy agreement.
Although each tenant is liable for the entire debt to third parties, the law provides for compensation between the joint tenants (Art. 148 OR). If a tenant has paid more than their actual share of the rent or the cost of repairing damage, they can reclaim the share attributable to the other joint tenants. However, this so-called recourse claim must be enforced by the paying tenant themselves against their co-tenants. The landlord is not involved in these internal disputes. It is strongly recommended that written agreements on the internal division of costs and the procedure in the event of payment defaults by individual members be made when the tenancy agreement is concluded or when the tenancy community is established. Such agreements can help to avoid subsequent disputes and financial difficulties.
In addition to the main obligation to pay the rent, a joint and several liability tenancy agreement gives rise to further rights and obligations for the tenant community. In principle, all joint tenants have the same rights of use of the rented property, unless otherwise specified in the agreement or in an internal agreement. Each tenant is also obliged to use the rented property with care and to show consideration for the other tenants and neighbours.
Important decisions affecting the tenancy must generally be made jointly and communicated to the landlord in a unified manner. These include, for example:
Termination of the tenancy agreement: Termination is only valid if it is signed by all tenants named in the agreement or if one tenant has been authorised in writing by the others to give notice on their behalf. Unilateral termination by only one tenant is invalid and does not terminate the tenancy.
Consent to contract amendments: If the landlord wishes to amend the contract (e.g. increase the rent) or if a tenant wishes to withdraw from the contract and be replaced by a new tenant, this requires the consent of all parties to the contract – i.e. the landlord and all joint tenants.
If one of the joint tenants causes damage to the rented property, all tenants are jointly and severally liable to the landlord for the repair of this damage. The landlord can claim the costs from each individual tenant, regardless of who actually caused the damage. Here, too, the paying tenant's internal right of recourse against the actual perpetrator applies.
Terminating or amending a tenancy agreement with joint and several liability can be complex, especially if the circumstances of one or more tenants change, for example due to separation, relocation or financial difficulties. As already mentioned, the tenancy agreement can only be terminated by all tenants jointly. If only one tenant wishes to withdraw from the contract while the others wish to continue the tenancy, there are several possible solutions:
Mutual agreement to amend the contract: The best solution is a written agreement with the landlord and the remaining tenants, whereby the tenant who is withdrawing is released from the contract and, if necessary, replaced by a new tenant.
However, they remain the main tenant and are jointly and severally liable. This option is often only a temporary solution.
Joint termination and new agreement: If no agreement can be reached on the departure of an individual tenant, the only option is often for all joint tenants to terminate the entire tenancy agreement. The remaining parties could then try to conclude a new tenancy agreement with the landlord.
It is important to understand that a tenant who simply moves out without obtaining formal release from joint and several liability remains liable for all obligations. This also applies if they have notified their co-tenants and the landlord of their move. Only a legally valid amendment or termination of the contract releases them from their obligations.
In the case of commercial leases, there is also a special provision under Art. 263 of the Swiss Code of Obligations, which allows the tenant of commercial premises to transfer the lease to a third party under certain conditions if the landlord agrees in writing. The landlord can only refuse consent for good cause. However, the transferring tenant is jointly and severally liable with the new tenant for the obligations arising from the rental agreement until the date on which the tenancy agreement ends or can be terminated in accordance with the agreement or the law, but for a maximum of two years.
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