Everything You Need to Know About Renting: How to Write a Lease Agreement

Quick Overview:

If you’re wondering how to draft a lease agreement step by step, start with the following information:

• clearly identify the landlord and tenant,
• clearly describe the apartment or other property being rented,
• specify the amount of rent, advance payments for utilities, and their due dates,
• specify whether the lease is for a fixed or indefinite term,
• outline the rights and obligations of the landlord and tenant, the handover of the apartment, the security deposit, and the rules for terminating the lease.

According to the Civil Code, a lease agreement for an apartment must be concluded in writing. However, a well-drafted agreement should address more than just the basic details—it is precisely unclear rules regarding payments, repairs, the security deposit, or the handover of the apartment that are often a source of disputes.

Not sure if your agreement truly protects your interests? Contact us, and our attorneys will draft or review your lease agreement and point out any provisions that could cause you problems down the road.

Real Estate Leasing

Renting out real estate is becoming increasingly popular. Whether it’s a short-term or long-term lease, it’s always worth having a carefully drafted lease agreement that protects both parties. Rental apartments are considered a safe investment, but more and more people are also interested in long-term rental housing for themselves.

The landlord wants to keep a close eye on their property while also making a profit. Conversely, the tenant seeks the most affordable housing with the greatest possible freedom. Renting is essentially the transfer of a specific property to someone else for their use, in exchange for payment.

Although Czechs tend to prefer homeownership, rental housing is still—and will continue to be—a more sought-after and suitable form of housing for a portion of the population. Even renting a house is no longer an exception these days. Moreover, interest in it has been growing recently.

However, rentingan apartment, a house, or even just a room should not be taken lightly. No one wants precarious living arrangements without a lease, even if it’s just staying with a relative you know. We definitely cannot recommend that. Renting a house is becoming increasingly common today, not only as an investment but also as a living arrangement for families who do not want to or cannot afford to buy their own property.

Apartment Lease Agreement – What Should It Look Like?

When entering into an apartment lease agreement, it is always crucial to precisely define the subject of the lease, the amount of rent, and the term of the agreement. The Civil Code stipulates that an apartment lease agreement must be in writing. A sample lease agreement can serve as a basis, but it must always be adapted to the specific apartment, the agreed-upon payments, and the terms of the lease.

The essential elements of a lease agreement are as follows:

• Identification of the Parties: The lease agreement must include the name or identification details of the landlord and the tenant. You should verify all information, especially if you do not know the people with whom you are dealing. The agreement should also include the permanent addresses of both parties, preferably along with their birth numbers or ID card numbers. You can also include contact information that may be useful (e.g., email).
• Subject of the Lease: The more specific you are, the better. This section should include information from the real estate cadastre, such as the parcel number, address, specific floor, or exact layout and square footage of the property. Tenants should not forget to request proof of ownership (a cadastre extract) from the landlord.
• Rent Payment and Payment Methods: One of the most important issues is certainly the amount of rent. It is crucial to determine whether the lease will include, for example, sewer fees, cleaning of common areas, advance payments for gas, and so on. List such advance payments for services related to the use of the apartment separately. Don’t forget to include the due date. For apartment leases, the Civil Code stipulates that rent must be paid in advance for each month or other agreed-upon period, no later than the fifth day of that period, unless the parties agree on a later date.

• Lease Term: It is important to specify in the lease agreement the term for which the lease is entered into. If the term is not explicitly stated, the lease is automatically entered into for an indefinite period.
• Security Deposit: If you require a security deposit, specify its exact amount, the method of payment, and the conditions for its return in the lease agreement. For apartment leases, the security deposit and the right to collect a contractual penalty may not exceed, in total, three times the monthly rent. Upon termination of the lease, the landlord returns the security deposit to the tenant and may offset any debts arising from the lease against it. The tenant is also entitled to interest on the security deposit at a rate of at least the statutory rate.
• Other Rights and Obligations of the Tenant and Landlord: This can be a very tricky part of what a lease agreement should include. You might be thinking, “It’s just a simple lease agreement”—there’s no way to mess that up. However, an apartment lease agreement should also include information that specifies as precisely as possible the condition of the apartment and the items within it that are included in the lease. Therefore, it may be accompanied by photographic documentation, a precise inventory of the included fixtures, the readings of the meters, or the number of keys handed over. This inventory is particularly useful when returning the apartment. For example, it’s often overlooked to clarify the obligation to repaint the apartment. The contract may also include a contractual penalty for breaching the agreed-upon obligations. However, the amount of this penalty must comply with the legal limits applicable to apartment leases.
• Termination of the Lease: Here, it depends on the agreement between the parties whether they specify a specific date or an indefinite term in the contract. The rules governing possible termination are particularly important.
• Final Provisions: The contract must include the signatures and the date on which it takes effect.

How to Draft a Lease Agreement Step by Step:

1. Identify the landlord and tenant
2. Specify the subject of the lease
3. Set the rent and utility payments
4. Specify the lease term
5. List the rights and obligations of the landlord and tenant
6. Specify the security deposit and any contractual penalties
7. Establish the rules for terminating the lease
8. Attach the handover report and sign the lease

From our legal practice: Disputes often arise not because a lease agreement is completely missing, but because it is too general. We also encounter cases where the parties use a standard lease agreement template without further modification and only realize during a dispute that it does not address their specific situation. Particularly problematic are the rules regarding payment for utilities, repairs, the return of the security deposit, or the condition of the apartment at the time of handover. Adding just a few extra sentences when drafting the contract can later make it significantly easier to prove what the parties actually agreed upon.

If you’re using a standard lease agreement downloaded from the internet, be sure to review the provisions regarding the security deposit, utilities, repairs, and termination of the lease. A generic document may not reflect what you’ve actually agreed upon with the other party.

Renting a garage or, for example, a long-term rental of a cottage

Rentals aren’t limited to apartments or houses for living in. You can also enter into a lease agreement fora garage, a cottage, or a cabin. Separate garage leases are often arranged in cities where there is a shortage of parking spaces, and even in this case, it is necessary to have a written lease agreement. For both long-term and short-term rentals of recreational properties, such as cottages or country houses, all the same requirements apply as for an apartment lease agreement.

Don’t forget to specify how any damage to property will be handled. The contract must also include provisions for payment of costs for water, electricity, gas, or firewood consumed. It’s best to include absolutely everything in the contract, including the security deposit, cleaning, and the total occupancy limit for the property. 

Renting outcottages and cabins can be an attractive investment for landlords. The same applies to garages, provided they are located in desirable, well-populated areas. It is common for the land beneath garages not to be included in the lease. That land may either be municipal property or belong to another private owner. This must also be taken into account in the lease agreement. However, cottage owners also face this issue. This issue is resolved by a lease agreement for the land beneath the cottage.

Renting a Cooperative Apartment—Sublease Agreement for a Cooperative Apartment

We’ve described abovehow to rent out a so-called privately ownedapartment , but how do you rent out a cooperative apartment? If you have a cooperative apartment—or, more specifically, if you’re a member of the cooperative—you yourself have a lease agreement with the cooperative, since you don’t personally own the apartment.

If you do not live in the apartment and are considering renting it out, this is usually possible. However, technically speaking, this would be considered subleasing. First and foremost, check what your cooperative’s bylaws say. You might be surprised, but the right to sublease a cooperative apartment may be explicitly stated in the bylaws; otherwise, you’ll need to request approval from the cooperative’s governing bodies.

Apartment Sublease Agreement and How to Handle It

Apartment Sublease Agreement

Unlike a lease agreement, a sublease agreement or a room rental agreement is not subject to any specific rules, as the Civil Code does not specify what its essential elements should be. If you’re looking for a universal sublease agreement template, there’s no need for one. It always depends on what the landlord and the subtenant( s) agree upon .

In general, however, we recommend that both parties specify their rights and obligations in as much detail as possible to prevent future misunderstandings. Therefore, always make sure the sublease agreement includes a precise description of the apartment or part of the apartment being subleased—for example, if you’ll be occupying only a room—as well as the rent amount and the services provided, including their due dates.

And what about subletting non-residential spaces?

TheCivil Code uses the term “premises used for business purposes” for spaces intended primarily for business activities . The decisive factor is, in particular, the purpose for which the space is to be used according to the agreement between the parties. This refers to a space or room intended for the conduct of business activities; such a space is used at least predominantly for business purposes, regardless of how the purpose of the lease or sublease is stated in the contract.

Leasing of Non-Residential Space and Land

How does one go about leasing non-residential space —often office space or space used for business purposes? The legal framework for leasing non-residential space for business purposes is somewhat different and varies from that of residential apartment leases. If the tenant conducts business activities, the lease agreement will be governed by the rules governing the lease of commercial space. The rules for commercial leases differ from those for general residential leases in many ways.

In what specific ways?

This includes, for example, different notice periods or different rules for negotiating the lease agreement. As landlords, you should also be aware of the obligation to compensate the tenant for the transfer of the customer base upon termination of the lease. However, this can be addressed in the lease agreement.

Above all, it is important to pay close attention to the negotiation of the lease agreement itself. Make sure that the intended use is properly specified. A lease agreement for non-residential premises should include a provision stating that you may use the space for business purposes. This is important because, in principle, the tenant should not use the premises for any other purpose—or even for a completely different type of business—than what was agreed upon in the lease agreement.

What is the typical rent for non-residential space? Before signing a lease agreement,it is a good idea for both the landlord and the tenant to research the typical rent for non-residential space. Price maps for individual cities and towns, which list average prices by location, can be helpful. The most sought-after locations in the city center are usually the most expensive.

The lease of agricultural land—or the lease of any property, for that matter—does not necessarily have to be governed by a traditional lease agreement. It usually takes the form of a so-called leasehold. A leasehold is an agreementin which the lessor grants the lessee the right to use and enjoy the leased property in exchange for rent.

The word “enjoy” is important. Why? Because the lessee has not only the right to use the property but also the right to its fruits and benefits. You may have already encountered situations where an agricultural lease agreement or a pond lease agreement is concluded . Lease agreements are indeed most commonly concluded in agriculture or for the rental of gardens, but they can also involve a quarry, a restaurant, or a water spring.

Change of Property Ownership and the Lease

A change in property ownership does not, in and of itself, constitute grounds for terminating a lease agreement for an apartment or any other property. The Civil Code is based on the principle that the rights and obligations under the lease are transferred to the new owner of the leased property. It is true that certain terms of the lease may change. For example, provisions of the lease that the tenant negotiated with the original owner of the apartment beyond the scope of the law—and of which the new owner was unaware—are not binding on the new landlord.

Therefore, if the tenant managed to negotiate above-standard terms with the original landlord, they should ensure that the new owner is verifiably informed of them in advance so that those terms are preserved. It is sufficient for the new owner to have the lease agreement itself available.

What about the transfer of a lease agreement? Transferring a lease agreement is indeed possible, practical, and in accordance with the law. Assignment of a lease is used in situations where the owner wishes to transfer the responsibilities associated with the lease to a third party. After the lease is assigned, this third party assumes the role of landlord. However, the tenant must consent to this.

Do you need to terminate a lease agreement but are unsure of the grounds for termination or the proper procedure? Have a lawyer review your notice of termination before you serve it on the other party. An error in the notice of termination could result in the lease not ending as you expect.

Vehicle Lease Agreement

A lease agreement doesn’t have to be limited to an apartment, house, or garage. You can lease just about anything. One example is a vehicle lease agreement, which is commonly used, for instance, by companies. We often refer to this as “operating lease.” The lessor is required to provide the lessee with all necessary documents along with the vehicle.

The vehicle must be roadworthy and suitable for normal use. If this is not the case, the lessee has the right to refuse to accept the vehicle or to request that the defect be remedied. The lessee is obligated to maintain the vehicle in the condition in which it was received, taking into account normal wear and tear.

Summary

When drafting a lease agreement, be sure to include details about the parties, the subject matter and purpose of the lease, rent and utilities, the lease term, the security deposit, the handover of the apartment, rent increases, termination of the lease, and the rights and obligations of the parties. The agreement must be in writing and must not restrict the tenant’s statutory rights. The agreement should also clearly describe the security deposit or contractual penalties, payment for utilities and services, maintenance, repairs, and the handover of the property. The rules vary depending on the subject of the lease. For a cooperative apartment, it is typically a sublease; for non-residential premises, a commercial lease; for land, a leasehold; and for vehicles, for example, an operating lease. A change in ownership does not usually terminate the lease.  Before signing, verify that the contract is clear, complete, and in compliance with current laws.