Real estate lease agreement according to the Law of Contract and Torts

Obligations of a lessor and a lessee, Sublease and Termination of lease

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According to the provisions of the Law of Contract and Torts lease agreement shall be defined as a contract by which one person shall assume the obligation to deliver a specific object to another person (lessee) for use, and lessee shall assume the obligation to pay him in return a specified compensation (rent) and to restore him the rented thing after the termination of the contract. The use shall also include collecting yields, unless otherwise provided by contract or by trade usage.

The lease agreement is named contract because it is regulated by law, onerous, consensual – it is formed in accordance with the consenting minds, bilaterally binding and simple contract – it does not contain elements of the other contracts.

Also according to the provisions of the Law of Contract and Torts the lease agreement is an informal contract. In particular regulations can be prescribed and required form of the lease agreement (written form, verification of signatures, etc.). According to the provisions of Article 568 of the Law of Contract and Torts the provisions of the Cahpter XI, which regulates lease, shall not apply to leases otherwise regulated by particular regulations.

Obligations of a lessor

Obligations of a lessor according to the Law of Contract and Torts are:

  • delivery to the lessee the object rented which shall be suitable for proper use together with its accessories
  • maintenance of the object in proper condition for use in course of the lease
  • protection of the lessee from the legal and substantive defects on things.

Obligations of a lessee

Obligations of a lessee according to the Law of Contract and Torts are:

  • use of object according to contract or in accordance with the purpose of the object, as a good businessman, or as a good head of household
  • payment of rent within time limits specified by contract or by law, and should there be no contract or law, in the way practiced in the place of delivery of the object to the lessee
  • maintenance and restoring of a undamaged object after the termination of the lease.

Lease agreement and Sublease

According to Article 586 paragraph 1 of the Law of Contract and Torts, unless otherwise stipulated, a lessee may lease the object leased to another (sublease), or he may give it to the use of another on some other ground, but only after making sure that this shall cause no loss to the lessor. This is dispositive norm, but it can be possible that the lease agreement contains the obligation of the lessee to require from the lessor a permission for sublease things and if the lessee does not acquire it, lease agreement can be terminated by the lessor for this reason .

The lessee shall guarantee to the lessor that the sublessee shall use the object according to the lease agreement.
Law of the Contract and Torts provided for that in order to effect payment of his claims from the lessee on the ground of a lease, a lessor may directly demand from the subleassee the payment of the amount due by the latter to the lessee by the sublease.

Sublease is accessory contract because it depends on the lease and it can last only for the duration of the lease or the lease agreement.

Alienation of the object leased

The Law of Contract and Torts provide protection to lessee by the provisions of Articles 591 to 594 in the cases of alienation of the objects by the lessor owners. If the lessor alienated the object that is the subject of the lease, the Law of Contract and Torts distinguish two situations:

  • First when the owner alienated object after the delivery of object in the lease and
  • Second when he done it after the conclusion of a particular contract, and prior to delivery of things in occupation of lessee.

In the first situation, an acquirer of the object shall take the place of the lessor, so that subsequently the rights and duties out of the lease shall take place between him and the lessee. The acquirer shall demand that the lessee deliver to him the object prior to the expiration of the leasing time, and should that time be not determined by contract or by law, then, prior to the expiration of the period of notice.

And in the second situation the acquirer shall take the place of the lessor, assuming his obligations to the lessee, if he was aware, at the moment of entering into contract of alienation of the existence of the lease contract. An acquirer not being aware at the moment of entering into contract of alienation of the existence of the lease contract shall not be bound to deliver the object to the lessee, while the lessee may only demand damages from the lessor. The person effecting transfer shall be liable as a joint guarantor for the acquirer’s obligations to the lessee under the lease.

Should because of alienation of the object leased, rights and duties of the lessee be transferred to the acquirer, the lesseer may in any case cancel the contract, while adhering to statutory periods of notice.

Termination of lease

According to provisions of Articles 595 to 595 of the Law of Contract and Torts lease agreement shall be terminated on the following four manners:

  • expiration of designated time
  • notice
  • loss of object due to an act of god (force majeure)
  • death.

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