The Supreme Court examines obligation to notify defects in right of use
According to a ruling by the Supreme Court issued on October 24, 2024, a commercial tenant is not obligated to notify defects in the right of use to maintain their right to compensation.
Background
A tenant has been renting a retail space in Stockholm since 2014. In March 2021, the tenant suffered damages to, among other things, goods and fixtures, as well as lost revenue due to a so-called chilled beam detaching from the ceiling and causing water damage in the premises.
The tenant's insurance company, Trygg Hansa, paid out insurance compensation to the tenant for the damages. Trygg Hansa subsequently filed a claim against the landlord for recourse, arguing that the landlord was responsible for the damage. The landlord countered that the tenant had not notified the defect within a reasonable time, thereby forfeiting the right to claim compensation, and that there was thus no basis for Trygg Hansa's recourse claim. Trygg Hansa argued that the tenant was not obligated to notify the defect.
With the support of Chapter 56, Section 13 of the Code of Judicial Procedure, the district court referred the question to the Supreme Court regarding whether the tenant had an obligation to notify the defect in relation to the landlord.
The Supreme Court's Examination
The Supreme Court initially noted that, according to existing rules on liability distribution and notification obligations, a tenant is entitled to compensation for damage that occurs to a premises during the rental period without the tenant being responsible, provided the landlord does not demonstrate that the defect was not due to their negligence (Chapter 12, Section 11, first paragraph, and Sections 4 and 16, first paragraph of the Land Code).
Additionally, a tenant is obligated to notify the landlord if damage occurs to the premises. If damage arises that must be immediately remedied to prevent serious inconvenience, the tenant is required to promptly notify the landlord of the damage. Notification of other damage must be given to the landlord without unreasonable delay. If the tenant neglects to notify the landlord, the tenant is responsible for the damage caused by the neglect (Chapter 12, Section 24, second paragraph of the Land Code).
Furthermore, the Supreme Court noted that there is a general principle in civil law to notify breaches of contract, but this does not mean it applies in all cases. Consideration must be given to the specific legal area and whether it concerns short-term or long-term agreements. Lease agreements differ from other contracts due to their enduring nature and ongoing obligations. Generally, the reasons for an obligation to notify are stronger in short-term contractual relationships.
The provisions in Chapter 12 of the Land Code are specially tailored for lease relationships and contain detailed rules on how the parties should communicate with each other, suggesting caution in supplementing with general legal principles compared to agreements in legal areas not covered by specific legislation.
In summary, the Supreme Court considered that the distinctive features of lease agreements, together with the design of the legislation, argue against a tenant being obligated to notify to maintain their right to compensation for defects in the right of use. Additionally, the tenant's notification obligation under existing rules in the Land Code already largely fulfills the purposes that underpin an obligation to notify. Against this background, the Supreme Court found no reason to supplement the legal provisions with a general principle of notification.
The Supreme Court's decision thus means that there is no obligation for a commercial tenant to notify defects in the right of use to maintain their right to claim compensation.
The Supreme Court decision on October 24, 2024, in case Ö 873-24.
