Is a space a premise? Lease of unusual units

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When renting the premises which are not architecturally marked off units, there is a question which regulations of the Civil Code relating to lease should be applied.

Commercial lease in the buildings meant for offices, retail or services not always concern architecturally marked off units. Quite often the transaction involves an open retail space, the whole building or a room with shared bathrooms and social rooms.

 

The question arises, which regulations of the Civil Code referring to lease should be applied. We have a group of the general provisions of the lease relating to the lease of any property (art. 659 - 679 CC). The next group of regulations (art. 680 - 692) applies only to the lease of premises, and they either complement the group of the general provisions or – in the areas where they implement different regulations – they exclude the general provisions.

 

Examples:

  • statutory notice period of the lease for an indefinite period for the premises for which the rent is payable monthly, is three months, and the period of notice of such a lease agreement on other things is only one month (in both cases, the notice period is the end of the calendar month);
  • in case of termination of the lease agreement without the notice period because of the payment arrears of at least two full settlement periods, it is necessary to send the tenant a written notice and to give him no less than a month to pay off the arrears, however, with the lease of other things, the arrear itself is enough to terminate the agreement.

 

At the same time, the Civil Code does not define the premise, and the definition from the Act on Ownership of Premises serves entirely different purposes and is rather too restrictive for the needs of the lease. Then how to treat the lease of the premises which are not marked off with permanent walls or doesn’t have their own sanitary unit?

 

To resolve these doubts, judicial practice decides to treat the definition of premises flexibly and to apply the regulations about the leasing widely. Supreme Court in its judgment in 2006, for example, stated that “lease agreement for “floor space” in the building of department store is subjected to the regulations of the Civil Code concerning premises lease, not the general lease regulations, also in terms of period of notice”. It is also generally agreed that the lease regulations are applied to the lease of entire buildings or rearranged premises.

 

Remember that when in doubt, the lease agreement regulations indicating whether the parties treat a given transaction as a premises rental – for example, terminology characteristic  for such agreements or charges calculated per square meter - will be of great importance.

 


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