Legal Updates

A tenant that continues to hold the asset after terminating the lease may be deemed to have withdrawn from the termination

June 15, 2020

Tenants sent their landlord a notice of termination of the lease as he did not fix electricity issues, but nevertheless continued to hold the apartment for over six months.
The Court held that when the tenants chose to keep holding the apartment, they effectively waived the termination notice, and the landlord was thus entitled to also infer a waiver of the demand to fix the electricity issues. Israeli Contracts Law grants a contracting party the right to unilaterally terminate the contract, but the justification of such termination will be examined ex-post. A party terminating a contract assumes the risk that it will later be decided that no right of termination existed and the termination notice itself constituted a breach by such party. Israeli Rental and Borrowing Act does not grant a tenant who terminated a lease the right to continue holding the asset thus creating a new agreement, because parties' behavior is not enough to change an existing contract, especially in the context of a long-term contact. Here, as the tenants chose to terminate the lease, they were required to return possession to the landlord and by this the contract would have reached its end, regardless of who breached the agreement. However, when the tenants chose to continue holding the asset, the landlord was entitled to infer from this a waiver of the alleged breach resulting from the failure to fix the electricity, and that the original lease continued.