Lease contracts

The conclusion of real estate transactions is formalized by signing a contract. Sometimes the transaction is based on your contract template, which was developed and agreed by your lawyers and which you know to the last letter. However, very often the contracting party may insist on using its own contract template, especially if one acts as the seller/the lessor.

It is difficult to imagine legal support of real estate transactions without real estate lease contracts. Despite the relative simplicity, real estate lease contracts differ significantly from each other and provide for a lot of nuances.

Generally, real estate lease contracts can be divided into residential and non-residential real estate lease agreements. In practice, we have to deal more often with the rental of non-residential real estate, which, in turn, are also not of the same type.

For example, one of the most common lease contracts for non-residential real estate is an office lease contract in a business centre or a sales outlet in a shopping centre. Such contracts are standardized and arranging amendments to such contracts is a rather complex process.

If turn to lease contracts for residential real estate, then in practice, the most common are lease contracts for residential real estate between companies and lessors for company employees.

It should be noted that in the Civil Code of Ukraine there is the concept of “lease contract”, and in the Economic Code of Ukraine – only the concept of “rental contract”. By their legal nature, these are identical names for the same transaction, but from the point of view of the law, the requirements for essential terms are significantly different.

The list of essential terms differs depending on who are the parties of the lease contract – individuals or legal entities. In the first case, only the subject and the price are obligatory terms. In the second case, the madatory list is much longer

Practically, if individuals enter into an apartment lease contract, then the contract must specify the subject of the contract, the term and the price of such a contract, as well as the persons who will live in the premises.

If the company enters into a premise lease contract, the contract must indicate the composition and the cost of the lease object, taking into account its indexing, the contract term, the rent amount, the order for using amortized deductions and the conditions for restoring the lease object, its return or redemption.

If a land plot lease contract is concluded, then in such a contract it is necessary to indicate information about the land plot – the cadastral number, location and its area, date of conclusion and term of validity of the contract, as well as the rent amount, including: conditions for its indexing; method and terms of payment; terms and order for its making and revision; responsibility terms for non-payment.

VigoLex recommends paying attention to the following terms in a lease contract:

  • Procedure of acceptance and transfer of the lease object: does the lessor have the right to check the lease object before the start of the lease period, how long will the lessor have to vacate the premises after the end of the lease, is it possible to extend this period, etc.;
  • Lessor’s guarantees: does the lessor guarantee that he or she has the right to lease the lease object, that third parties do not make claims to the lease object, that the lease object has no encumbrances, etc.;
  • Rent: how is it calculated and what is included in the rent amount, who and how is responsible for paying utility bills, how the rent composition and amount can change, when payment should be made, etc.;
  • Use of the leased property: who is responsible and costs for the repair and maintenance of the normal condition of the lease object, is there compensation for the depreciation of the lease object, for what actions the lessee must obtain permission from the lessor, etc.;
  • Responsibility: what responsibility, for what actions and for whom the contract provides for – fines, immediate termination of the contract, rent increase, etc.

VigoLex team will be happy to provide you with the preparation services, as well as legal analysis of lease contracts or legal support and representation of your interests within the framework of real estate lease transactions.

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