Our company provides high qualified legal services in rent issues. If you need to rent apartments or lease a building be sure we will do it the best way. First we narrate about russian lease contract features.
In virtue of contractual freedom, which is protected by Russian law and by most legal systems, the parties to a contract, including to a contract of lease of a building, should be able to decide which law governs their contract via a choice of law clause. They should also choose the competent court to resolve the disputes that may arise from the contract via a forum selection clause; they can choose either a national court or an independent international tribunal. The selected court will solve the dispute on the basis of the legal system that has been appointed by the parties as the applicable law.
The explanations provided by this article apply to agreements of lease of a building or a structure that are governed by Russian law, regardless of the citizenship of the parties.
Lease agreements are governed by the 34th chapter of the Civil Code of the Russian Federation. A lease agreement is, as defined by article 606 of the code, a contract that obliges the lessor to provide the leaseholder with temporary possession and use or temporary use of the leased property in exchange for a rental payment. The leased property remains that of the lessor but on the other hand fruits, produce and income created by the leased property belong to the leaseholder. The lessor should be the owner of the property or any person that is allowed either by law or by the owner of the property to let said property on lease.
The fourth paragraph of the 34th chapter sets rules that are specific to lease agreements whose objects are buildings or structures. One of the specificity of building and structure lease agreements is the fact that the rights to the building or structure that are granted to the leaseholder extend to the part of the land plot which is occupied by said building or structure and which is needed for its use. This means that for the duration of the lease the leaseholder will be free to use the part of the plot that is occupied by the leased propriety and necessary for its use even in cases the lessor is not the owner of the plot. It should also be noted that the leaseholderâ€™s rights to the aforementioned part of the land plot continue, even if the ownership of the land plot on which the leased building or structure is located is transferred.
Aside from the specific provisions of the fourth paragraph of the 34th chapter lease agreements abide by the general provisions on lease that are stated in articles 606 through 625. Articles 606 through 609, as stated above determine what a lease agreement is, what can be the object of a lease agreement, who can be a lessor and what forms and procedures should be applied to lease agreements. Article 610 provides information on the term of a lease agreement; unsurprisingly, the parties are free to define themselves the term of the agreement when negotiating the contract. In cases the term hasnâ€™t been agreed upon on by the parties the lease is deemed concluded for an indefinite period, allowing parties to recede at any given time after having notified the other party three months before schedule in case of a real estate lease. Articles 611 and 612 regulate the obligation of the lessor to provide the leaseholder with the leased property, and the lessorâ€™s liability for defects of the property. Regarding the obligation to provide the property it is stated that the time period in which the lessor has to provide the property, as well as all accessories and documents that the parties have agreed would go with it, shall be agreed upon by the parties; if such period isnâ€™t determined in the agreement then the obligation should be fulfilled within a reasonable period. In case the lessor failed to fulfill the obligation within the appropriate period of time, the leaseholder can decide to claim for damages, and have the agreement enforced of dissolved. As to the liability of the lessor for defects, it is stated that the lessor should take full responsibility of any defect that the leaseholder rightfully not aware of of during the conclusion of the agreement, and should take it upon themselves to either remove the defect, reduce the rental payment, indemnify the leaseholder for all expenses they have made to get rid of the defect, or even accept the dissolution of the contract if the leaseholder claims it. Articles 614 and 615 regulate the obligation of the leaseholder to provide the lessor with rental payments, and the conditions of use of the property by the leaseholder. As far as rental payments go, they shall be paid in due time respecting the procedure, conditions and terms that were agreed upon on by the parties. Such contractual freedom also applies to the use that the leaseholder makes of the property, which shall also be decided by the parties. The leaseholder shall use the property in accordance with the provisions of the contract; otherwise the lessor has the right to dissolve said contract. Article 616 governs the obligation of both the parties to maintain the leased property. The lessor, unless the parties decided otherwise, should be the ones to take care of the overhaul in the conditions stated by the contract; the leaseholder, on the other hand shall maintain the property in good conditions. Article 613 states that the rights of third parties to the leased property do not cease because of the lease agreement and that the lessor is obligated to inform the leaseholder of such rights prior to concluding the contract. Article 617 ensures the continuation of the agreement even if the ownership of the leased property is transferred to another person, or the leaseholder dies (in that case, their heir should become the new leaseholder).Articles 618 through 620 govern the conditions of anticipatory cessation of the lease agreements and of the sublease agreements that might be attached to it. Sublease agreements should end with the lease agreement that they are attached to, unless stated otherwise by the lease agreement. If the leaseholder doesnâ€™t fulfill one of the obligations stated by the code or in the contract, the lessor, after notifying the leaseholder and granting them a reasonable period of time to fulfill said obligation, can request the lease agreement to be dissolved by a court. The leaseholder can also ask for the dissolution of the agreement when the lessor doesnâ€™t fulfill one of the obligations provided by the code or by the agreement itself, without noticing the lessor. Article 623 states that any enhancement or improvement made to the property by the leaseholder is the latterâ€™s property, and in case they arenâ€™t separable from the property, the leaseholder has the right to the replacement of their value after the termination the agreement, unless stated otherwise by the agreement. Articles 621 and 622 regulate the actions following the cessation of the lease agreement. Indeed, a leaseholder that has fulfilled its duties has a right of preference to the conclusion of a new lease contract after the expiration of the term of the former one; moreover, if the leaseholder hasnâ€™t stopped to use the leased property after the expiration of the term, and the lessor hasnâ€™t objected, then it is accepted that the agreement has been extended for an indefinite period of time. If the lease agreement is not extended or renewed, then the leaseholder has to return the property to the lessor in the same condition it was received, unless stated otherwise in the agreement; if the property isnâ€™t returned on time or in the right conditions, the leaseholder will have to pay a penalty. Another solution that exists after the cessation of the lease agreement is the redemption of the leased property, as stated by article 624. Indeed, the parties can agree on a term after which the property will become that of the leaseholder, provided that the latter has paid the full redemption price stated in the agreement.
The aforementioned provisions make it appear obvious that the parties to a contract governed by Russian law have great contractual freedom, as most of the terms and conditions are left to be agreed upon on by the parties themselves. However, there are conditions of form and of registration that agreements of lease of a building or structure have to meet in order to be valid. Indeed, such agreements have to be concluded in writing form via a document to be signed by all parties. Moreover, in virtue of the Federal law 122-FZ on State Registration of Rights on Real Estate and Real Estate Transactions that was passed in July 1997 all rights to be changed by real estate lease agreement concluded for a term of a year or more should be subject to state registration. Yes, we mentioned rights but not the contract itself. This is a specific regulation of Russian law. If the rights due to the agreement hasnâ€™t been registered it wonâ€™t be effective against third parties; it will however remain effective between the parties. The owner of a right over a real estate property, whether they, in case of a lease agreement, are a lessor or a leaseholder, shall make sure to apply to get their right registered on the Unified State Register of Real Estate (EGRN), which is operated by the Federal Service of State Registration, Cadaster and Cartography (Rosreestr). Application for the registration of a real estate lease is possible via the Rosreestr website.
Once the application has been successfully by Rosreestr the lease agreement will be registered on EGRN and will be deemed fully effective. But that fact doesnâ€™t mean third party which isnâ€™t the agreement party cannot challenge the agreement or part of it. The right holders can prove their rights by providing an up to date extract of EGRN. The register can also be consulted by anyone provided that they pay a fee to access more detailed information.
If it necessary to rent apartment, building, structures or premises in Russia (or other areas) our high qualified and experienced lawyers are able to provide best advice. Call us and donâ€™t doubt we will do the best job!