The Unregistered Lease and the Tenant’s Repairs
In March 2023, Marko leased his apartment in Zagreb to Ana for two years at €800 per month. The lease was oral; no written contract was signed, and possession was handed over. Ana paid a €1,600 security deposit. In January 2024, the building’s heating system failed. Ana notified Marko, who ignored her messages for three weeks. Ana paid a licensed technician €1,200 to repair the boiler, deducting that amount from the February rent. Marko now sues Ana for the unpaid rent, claiming the lease is invalid because it was not in writing. Ana counterclaims for the deposit and the repair cost. Croatian law requires leases over one year to be in writing, but an oral lease for a fixed term may still produce obligations. The applicable consumer protection rules and the Landlord-Tenant Act are in force.
1. Is the oral lease valid and enforceable between Marko and Ana? Explain the consequences of the lack of written form.
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The oral lease is not automatically void. Croatian law (Zakon o najmu stanova) requires a written form for leases of one year or more, but failure to observe that form does not necessarily invalidate the contract if the parties performed it. Here, Marko handed over possession and Ana paid rent for ten months, so the lease was performed. Under the principle of favor contractus and the rules on defective form, the lease is likely valid but the parties may not rely on it against third parties without a written document. The lack of writing affects proof, not the existence of the obligation. Marko cannot claim the lease is invalid while retaining the rent and deposit; that would contradict his own conduct (nemo auditur propriam turpitudinem allegans). Therefore, Marko’s claim that the lease is invalid fails, and the rent is due under the performed contract.
2. Can Ana lawfully deduct the €1,200 repair cost from the rent? Discuss the conditions for tenant repairs and set-off.
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Ana may have a right to set-off if she followed the statutory procedure. Under the lease rules, the landlord must maintain the property in a habitable condition. If the landlord fails to remedy a defect that makes the apartment unusable, the tenant may have the defect repaired and deduct the cost from rent, but only after notifying the landlord and giving a reasonable deadline. Ana notified Marko and waited three weeks, which is likely reasonable for a heating failure in winter. She hired a licensed technician and paid a market rate of €1,200. The deduction is proportionate to the February rent (€800) plus part of March rent, but she deducted the full €1,200 from February rent, which exceeds one month’s rent. She may set off the remaining €400 against future rent. The set-off is lawful to the extent of the actual cost and provided the repair was necessary and urgent. Marko’s claim for unpaid rent should fail up to €1,200, but Ana cannot recover more than the proven cost.
3. What are Ana’s rights regarding the €1,600 security deposit at the end of the lease?
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The security deposit must be returned to Ana at the end of the lease unless Marko proves damage beyond normal wear and tear or unpaid rent. Since the lease was performed, the deposit is not forfeited merely because the contract was oral. Marko may deduct any outstanding rent or proven damage. Here, the €1,200 repair cost was already set off against rent, so it cannot be deducted again from the deposit. If Ana leaves the apartment in the same condition, Marko must return the full €1,600. If he fails, Ana can claim it with interest. The burden of proof is on Marko to itemize deductions. The oral nature of the lease does not deprive Ana of this right.