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Legal briefing notes

The lease agreement

The lease of the property like any other deal is quite risky. That is why you need the help of a qualified specialist on the accompaniment of the lease relationships because it will be a guarantee of a successful deal.

The lease agreement is a contract between the landlord and lessee and according to this agreement the property will be transferred for its temporary use for a fee. The parties to this agreement can be both natural and legal entities. The rights and obligations of this agreement are enshrined in the Civil Сode of the Russian Federation.

Requirements for the form and state registration of lease agreement

The common rule for the form of the lease agreement is enshrined in p. 1 of article 609 in the Civil Code of the Russian Federation. It is said that the lease agreement for more than a year and if a party to this agreement is a legal entity should be concluded in writing.

Nevertheless, special regulations on the lease agreement of property (buildings, constructions, etc.) establish that it should be done in writing. The absence of agreement in writing means that transaction is invalid. (articles 651,656 in the Civil Code). And that is not all.

If the lease agreement is concluded for more than a year it should be registered in the Russian State Register. This requirement of the law is designed to reflect the information in the public register to inform and protect the interests of the third parties who for example may purchase the object of property that is under the long-term lease agreement without knowing about such agreement.

The lessee of the building according to such agreement that is concluded for more than a year and that was not registered may not invoke the preservation of the right in case of change of the owner, who did not know and couldn’t know about such agreement that was not registered. (p. 3 article 433 of the Civil Code, the second paragraph of p.5 of decisions of the Plenum of the Supreme Court from 25.12.2018 № 49) However for internal parties to such lease agreement the absence of the state registration does not affect the rights and obligations of the parties under this agreement. (p. 1 article 433 of the Civil Code, the third paragraph of p.5 of decisions of the Plenum of the Supreme Court from 25.12.2018 № 49)

Important nuance: the lease agreement that was concluded for an uncertain period does not need to be registered because the law does not include any requirement on the registration of the contracts of unlimited duration. Such agreement according to the common rule may be terminated by one of the parties without any reasons under the condition of advance notice of a counteragent during the 3- month period before the date of termination. (p. 2 article 610 of the Civil Code)

The order of the rent payment and its forms

The rent payment can be periodic (for example, every month or every year) and in the form of a one-time payment. Moreover, the rent payment does not always have a monetary form. For example, the parties may consider that as a necessary rent payment can be the services that will be provided by the lessee or the products or provide to the landlord things or pay for the improvement of the property. (p. 2 article 614 of the Civil Code)

The possibility for subleasing the leased property

According to p. 2 article 615 of the Civil Code, the lessee can sublease the rental property with the consent of the landlord for a period that is not more than a period of the lease agreement. And the lessee shall remain liable to that landlord.

This regulation does not exclude the possibility of establishing the other terms in the lease agreement for the order and the possibility of subleasing the leased property.

The inseparable improvements of the leased property and the cost recovery of the lessee in cessation of the lease agreement

You should pay special attention to the reasons for the termination and the cessation of the lease agreement and the consequences of conducting the inseparable improvements in the cessation of the lease agreement.

According to the common rule, the inseparable improvements that were conducted should be recovered after the cessation of the lease agreement in case such improvements were consented by the landlord. If there is no such consent the lessee does not have the right to the cost recovery (p. 2 and 3 article 623 of the Civil Code). The exception is when the inseparable improvements were conducted under the lease agreement of an enterprise (article 660, 662 of the Civil Code).

However, the parties to the agreement can avoid the common rule of the Civil Code and conclude that the landlord should recover the cost of the inseparable improvements even when they are conducted without consent and they can exclude such obligation at all.

And these are not even all features of the lease agreement that you should pay attention to and foresee possible effects. And for this on the stage of the harmonization of conditions of the agreement the best decision will be to hire a qualified specialist who draws attention to the rights of the parties and the receipt details and the description of the subject of the future agreement.

The advantages of working with us

Working with the specialists of the Tsentralny okrug Law firm gives lots of opportunities:

  • You save your time during the preparation of the conclusion of the agreement and the verification of the co-contracting parties;
  • There is no need to prepare a full package of documents to conclude the transaction;
  • We minimize the risks in the conclusion and registration of the lease agreement and as the consequence, you save your time and money in case of repeated conclusion of the transaction;
  • Representation in the courts in case of a dispute with a co-contracting party. The lawyers of the Tsentralny okrug Law firm concluded hundreds of transactions on the lease agreement and we guarantee a positive result for our clients.
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