It is no surprise that Law No. 13/2019 of February 12, which promised to implement measures aimed at correcting imbalances between tenants and landlords and strengthening the stability of urban leases, amended the wording of Article 1096(1) of the Civil Code under the heading “Automatic Renewal,” thereby sparking debate about the existence of a mandatory minimum renewal period of three years in renewable lease agreements for residential purposes.
Article 1096(1) of the Civil Code now reads as follows: “Unless otherwise stipulated, a fixed-term contract shall be automatically renewed at its expiry for successive periods of equal duration or of three years if inferior, without prejudice to the provisions of the following paragraph.”
The amendment to this rule thus resulted in the addition of the expression “or three years if this if inferior.”
This addition soon gave rise to differences in interpretation, with two main schools of thought emerging: one arguing that, under the freedom and autonomy of the parties and by virtue of the use of the initial phrase “Unless otherwise stipulated,” the parties may stipulate renewal periods of less than three years; the other, also very much in line with the spirit and framework introduced by Law No. 13/2019, arguing that the legislator wanted to impose a mandatory minimum limit of three years on contract renewal.
In view of this controversy, and as might be expected, our courts have been called upon to settle disputes between landlords and tenants and, recently, on July 3, 2025, the Supreme Court of Justice ruled again [in the same vein] on this issue, through a judgment handed down in judicial case No. 1482/24.0YLPRT.L1.S1, consolidating its previous rulings.
The case identified above concerned a lease agreement entered for an initial term of five years, beginning on February 1, 2018, renewable for periods of one year, and in relation to which the landlord opposed the renewal by letter dated July 28, 2023, with effect from January 31, 2024.
In this context, the Supreme Court of Justice upheld the appealed judgment, arguing and ruling that the expression “Unless otherwise stipulated” cannot be interpreted as applying to the entire text of Article 1096(1) of the CC, since, if this were the case, it would render Law No. 13/2019 meaningless, namely, to guarantee the security and stability of urban leases, and would also clash head-on with Article 1097(3) of the CC, which introduced “(…) a minimum term of three years for renewable lease agreements.”
With this decision, the understanding that, although the parties are allowed to exclude automatic renewal (and it is here and with this limitation of application that the advocates of this line of thinking defend the scope of the expression “Unless otherwise stipulated”), if it is agreed upon, it must imperatively have a minimum period of three years, in accordance with the provisions of Article 1096(1) of the Civil Code.
In other words, the judges and advocates of this position conclude that, as this is a supplementary rule, because the parties may agree not to renew the lease agreement, it ceases to be so when we are dealing with a renewable agreement, in which case it becomes mandatory.
Notwithstanding, given the relevance of the issue and the wording of the law, it is expected that this matter will continue to give rise to litigation and that our courts will continue to issue decisions with different interpretations, highlighting the controversy.
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