By a lease agreement, the landlord provides the tenant with a specified property (such as a flat, house, office, etc.) or a part of it (a room, a floor of a house) for temporary use in exchange for payment of rent. This article examines the key aspects of the conclusion, term, rights and obligations of the parties, as well as the conditions for terminating a lease agreement.

Conclusion of a Lease Agreement

A lease agreement is considered valid even if it is concluded only orally, without a written agreement between the parties. In this case, in the event of a dispute, the provisions of the Obligations and Contracts Act apply automatically.

Nevertheless, the written form of the lease agreement is strongly recommended for the purpose of proving the arrangements between the parties in the event of future disagreements. For leases of properties for commercial or business purposes (offices, shops, etc.), notarial certification of the signatures and entry in the Property Register is often required in order for the agreement to be valid for a fixed term even upon a change of ownership.

  • When leasing agricultural land, the agreement must be concluded in written form with notarial certification of the signatures and entry in the Property Register and the register of the municipal agriculture service.
Term of the Lease Agreement
  • Maximum term: A lease agreement for a property may not be concluded for more than ten years, unless it concerns a commercial transaction.
  • Minimum term under a farm lease: Farm lease agreements for agricultural land have a minimum term of five farming years and no maximum limit.

If persons who may perform only acts of ordinary management conclude a lease agreement for more than three years, it remains valid only for three years, regardless of the term originally agreed.

Rent

The rent is determined freely between the parties and may be agreed as monthly, annual or other periodic rent. In the case of related parties, the rent must correspond to the market values for this type of property for tax purposes.

Customarily, upon conclusion of the agreement, the first month's rent and a deposit are paid, the deposit being refundable upon termination of the agreement if there are no unpaid rents or charges. In some cases, clauses for updating the rent, based on inflation or changes in market prices, are also agreed.

Rights and Obligations of the Landlord and the Tenant

  • The landlord is obliged to hand over the property in a condition corresponding to the agreed purposes. Where repairs are needed, the tenant usually carries them out in exchange for a reduction of the rent for a specified period. The landlord is not liable for defects known to the tenant at the conclusion of the agreement, unless they endanger the tenant's health.

  • The tenant is obliged to use the property for its intended purpose and to bear the costs associated with its use (electricity, water and maintenance of the common parts). The tenant must return the property in good condition after termination of the agreement, being liable for the damage caused during the period of use.

  • The costs of local taxes and charges are usually borne by the owner, unless otherwise agreed in the contract.
Transfer of the Leased Property During the Lease Term

Upon transfer of the property, the agreement remains in force for the new owner if it is entered in the Property Register. If the agreement has a certain date (e.g. through notarial certification), it is binding on the new owner until the expiry of its term, but for no more than one year from the transfer. In the absence of a certain date, the agreement is deemed to be concluded for an indefinite term and may be terminated with one month's notice.

Termination of the Lease Agreement

The lease agreement terminates automatically upon the expiry of its term. If the tenant continues to use the property with the knowledge of the landlord, the agreement is deemed to be extended for an indefinite term. Where no term is specified in the agreement, either party may terminate it with one month's notice.

Clauses for early termination may be included in the agreement, most commonly in cases of non-payment of the rent or the utilities.

Should you require further information or assistance in drafting, amending or terminating a lease agreement, contact us by telephone: 0887550706 or by e-mail: [email protected]