What you should know about lease agreement and why it is important

10.02.2021

The lease agreement regulates the relationship between the landlord (owner of a property) and the tenant (person who wants to use the property). The lease agreement is regulated under  Act No. 89/2012 Coll., The Civil Code (hereinafter referred to as the “Civil Code”).

In this article, we will highlight all necessary parts of the lease contract. Therefore, if you are thinking of renting a property, this article is intended for you.

Let’s suppose, you have already chosen your ideal property and now the last task is to sign a written lease agreement. This agreement can have many law´s terms to keep in mind. Also, be aware of the mandatory requirements of the contract, otherwise, the contract could be invalid.

1. Identification of the contracting parties

Your data must be identified, i.e. your name, surname, date of birth, address, and bank account number, and at least the same information is needed about the landlord. It is necessary to check if the landlord is the real owner of the property. The best practice is to have a copy of an entry in the Land Register, in which the property owner is always listed. It is best to insist this copy is part of the contract.

2. Property identification

A detailed specification of the property itself is also very important. Otherwise, it may happen that you will be renting a different property than the chosen one. Fortunately, this can also be checked using the above-mentioned extract from the Land Register, where the property is clearly defined. In the case of renting an apartment, the contract should also state on which floor the apartment unit is located and its number.

Although the following parts are no longer a mandatory part of the lease agreement, they are very often negotiated, and unfortunately not always in accordance with the law. So here are the most important parts of a lease agreement to which you should pay extra attention.

 

Handover Protocol

This document can save you a lot of worries in case of possible disputes arising from the condition of the property and energy arrears. 

So don’t forget to insist on signing this protocol on both occasions. Firstly, when you move into the property at the beginning of your lease, and secondly when you move out from the property. In the handover protocol should be described all defects and equipment that were in the property at the beginning so that it could not be charged to you when you move out. Services (water, electricity, gas) should be recorded in both protocols. If not, you could pay for energy that you haven’t consumed.  The handover protocol is signed by both parties, i.e. both you and the landlord.  Always insist on one copy of handover protocol for yourself. We recommend taking pictures of the property before moving in and moving out. In case of action in court, this could help you to win the dispute over the landlord. 

 

Deposit

The landlord may require a guarantee, sometimes called a deposit. It is an amount of money that the tenant provides to the landlord. The deposit may be up to 3 months rent. The landlord can use the deposit, for example, when the tenant does not pay the rent on time, or to repair the damages caused by the tenant. If the landlord doesn’t use the deposit, he is obliged to return it to you at the end of the lease. The common practice of the landlords is that in the contract it is written that they can return the deposit only after overall billing of services and delivered to the landlords.

 

Contractual penalties

From 1 July 2020, the penalty can be stated in the contract in the event of a breach of certain obligations, such as missing the deadline for payment of the rent. However, even this has its limits.  The penalty together with the deposit may be up to three months rent. Anything above this amount is against Czech law.

 

Raising rents

The rent may be increased during the lease period. This increase is usually agreed in the lease agreement, for example, due to inflation. In this case, it must always be clear when and under what conditions the rent may increase. However, if there is no agreement in the contract, the landlord has the opportunity to propose to the tenant to unilaterally increase the rent once a year, provided that the legal conditions are met. It must be communicated to the tenant in written form, and the tenant must also, if he/she agrees with the increase, respond to the landlord.

The parties may expressly exclude the possibility of increasing the rent in the contract. However, this is rather unique in the contracts.

 

Termination of a lease contract

You can have the lease contract agreed for a definite period or an indefinite one. Usually, the contract is concluded for one year. The lease contract for a definite period ends with the expiration of the agreed period, otherwise, it can be terminated only for reasons expressly stated in the Civil Code. 

The process of termination of a lease contract isn’t easy and in each case, there are a lot of circumstances that must be taken into consideration, including legal reasons to terminate the lease contract and appropriate notice period.

Any steps towards the termination of the lease contract must always be in written form and delivered to the other party without any doubt. 

 

Conclusion

Before you sign the lease contract, keep in mind that you should check the contract with the Czech lawyer to avoid any probable legal dispute in the future. If you are not sure that your lease agreement is according to Czech law and all your rights are guaranteed, we can review your lease agreement with English comments or prepare a new lease agreement in the Czech-English version for you to understand everything that is written in the contract. Do not hesitate to contact us. 

 

Check your lease contract in less than 48 hours or let us prepare for you a new lease contract. 

 

Mgr. Denisa Zobelt, legal trainee

Mgr. Hana Křenková, attorney at law

 

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Advokátní kancelář Křenková, s.r.o.
Pobřežní 78, 186 00
Prague, Czech Republic
ID No.: 08798451
Registered in a business register held at the City Court in Prague, Section C, Insert 325560

 

Mgr. Hana Křenková is a member of the Czech Bar Association under the evidence number 17227.