Apartment Lease Agreement: What Not to Forget

Quick Overview

What a rental agreement for an apartment should include:

• identification of the landlord and tenant,
• a precise description of the apartment and its fixtures and fittings,
• the lease term and its start date,
• the rent amount, payment due date, utilities,
• any security deposit and the rules for its return,
• the rights and obligations of both parties and the rules for terminating the lease.

Before signing the lease, also verify who the actual owner of the apartment is and document the condition of the apartment in a handover report. After all, in a lease, it’s often not just what’s in the contract that matters, but also whether any of its provisions conflict with the Civil Code.

Are you signing a lease agreement and unsure whether something important is missing? We’ll review your lease agreement and alert you to any provisions that may be disadvantageous or invalid for you.

From legal practice: Landlord Unlawfully Refused to Return the Security Deposit to the Tenant After the Lease Ended

Miluše and Antonín, a married couple, recently moved out of their rental apartment. As is customary, they requested the return of the security deposit they had previously paid. However, the landlord refused to return the deposit. They therefore turned to us to help resolve this unpleasant situation.

The landlord is indeed entitled to require, when entering into a lease agreement for an apartment, that the tenant pay a security deposit as a guarantee that the tenant will pay the rent and return the apartment in good condition at the end of the lease. However, this security deposit may not exceed three times the monthly rent. Upon termination of the lease, the landlord returns the security deposit to the tenant, offsetting any amounts the tenant may owe from the lease. We have, however, advised our clients that they are entitled not only to the return of the security deposit but also to interest—at least at the statutory rate.

What is the statutory rate? In such cases, the law considers the usual interest rates to be those charged on loans provided by banks in the place of residence or registered office of the debtor (i.e., the landlord) at the time the contract was concluded. However, this approach is somewhat outdated. Interest rates tend to vary more based on the client’s creditworthiness than on the place of performance.

We helped resolve the issue faced by Miluše and Antonín. Following our intervention, the landlord ultimately reached an agreement with our clients. However, a far better solution is to prevent such situations from arising and to address everything in advance in the lease agreement. That’s why we’ve prepared a list of essential provisions that should be included in every lease agreement.

What must an apartment lease agreement include, and what other details should you pay attention to?

The law does not specify a single mandatory list of all the information that must be included in the agreement. In practice, however, it is advisable for an apartment lease agreement to include at least the following information:

1. Identification of the contracting parties: The first and last names of both the landlord and the tenant should be listed here, along with their permanent addresses and contact information (e.g., phone number and email address). If the party is a company, the company name, registered office address, and business ID number must be included.
2. Precise description of the apartment or house being rented: The exact address of the property (including the house number or registration number), floor number, and apartment number must be included. It is also advisable to specify whether the entire building, an apartment, or only a part of the property (e.g., a room) is being rented.
3. Lease Term: Clearly specify in the contract whether the lease is for a fixed or indefinite term. For a fixed-term lease, state the specific start and end dates. Do not forget to include the date on which the apartment is to be actually handed over to the tenant.
4. Inventory of Fixtures and Fittings: The lease agreement should also include a handover report. This report should contain a detailed list of all fixtures and fittings included in the lease (furniture, appliances, etc.). It should also include the condition of the furnishings and any specifications regarding their use.

5. Rent Amount: The exact amount and payment dates (e.g., monthly, on a specific date) must be specified here. Information about the refundable security deposit, including its amount and the conditions for its return, should also be included.

6. Utility Payments: Thissection should list the utilities included in the rent (water, electricity, gas, internet, etc.) and how payments for these utilities will be handled (included in the rent, billed separately, etc.). You may also include rules for adjusting utility payment amounts, such as based on consumption.

7. Additional Obligations and Allocation of Liability: Here, you can specify the landlord’s obligations (maintenance, repairs, ensuring access to utilities) and the tenant’s obligations (using the property without causing damage, complying with house rules). Additionally, provisions regarding who bears liability for damage incurred during the lease and the conditions for terminating the contract by either party, including notice periods.

Watch Out for Provisions That Don’t Belong in a Lease Agreement

Not everything a landlord writes into the lease and a tenant signs is automatically valid. Among other things, the Civil Code protects tenants from provisions that curtail their legal rights or impose clearly unreasonable obligations on them.

For example, a blanket ban on keeping pets or a requirement that the tenant obtain the landlord’s prior approval for every visitor can be problematic. Therefore, when reviewing the lease, don’t just focus on what’s missing—also pay attention to what’s included that shouldn’t be.

Have you come across a prohibition or requirement in the lease that you’re not sure is even valid? Have a lawyer review the lease before you sign it.

Annual Statements of Utility Services and Energy Deposits

We recommend that tenants request a statement of account every year and pay only what the lease actually stipulates. For example, contributions to the so-called repair fund are primarily the landlord’s responsibility, not the tenant’s.

The lease must be in writing. However, the landlord has no right to claim the lease is invalid against the tenant if the landlord fails to comply with the required written form and instead reaches an agreement with the tenant only verbally. In this context, it also applies that if the tenant occupies the apartment for a period of three years in good faith, believing the tenancy to be lawful, the lease agreement is considered to have been properly concluded.

Verify Ownership of the Apartment

Have the landlord provide proof of ownership of the rented apartment, ideally in the form of a recent extract from the real estate registry. The key point is whether the landlord is the sole owner or whether the apartment is part of joint marital property or held in shared co-ownership. If the landlord is not the sole owner, they need the consent of the other co-owner to enter into the lease agreement. The leasehold right can also be registered in the land registry, which makes the entire situation more secure.

What about rent increases?

The lease agreement may stipulate an annual rent increase or, conversely, completely exclude the possibility of rent increases. If the lease agreement contains no such provision, the landlord may propose in writing to the tenant a rent increase up to an amount comparable to the customary rent in that location. However, this is subject to the condition that the proposed increase, combined with any increases that have already occurred over the past three years, does not exceed 20 percent.

Furthermore, the landlord cannot use this legal procedure as often as they please. A proposal to increase the rent made before the expiration of a 12-month period during which the rent has not been increased will not be considered.

Is it possible to increase the rent even if the tenant objects?

If the tenant agrees to the proposed rent increase, they will pay the increased rent as proposed, beginning in the third calendar month after receiving the proposal. If the tenant does not notify the landlord in writing within two months of receiving the proposal that they agree to the rent increase, the landlord has the right to request, within the next three months, that the court determine the amount of the rent.

The court will not grant the request after this period has expired if the tenant objects that the request was filed late. Upon the landlord’s request , the court will determine the rent at a level customary for the location and time, effective as of the date the request was filed with the court.

In conclusion, we would like to remind you once again that a fundamental part of a lease agreement is the determination of the rent amount as well as the terms for utility payments. In this case, there are several options: The rent may already include all additional costs, or utilities may be paid separately—whether in the form of advance payments or additional payments made directly to the landlord or to individual service providers. So be sure to clearly specify the rent amount in the contract and include the due date.

We’d be happy to draft a real estate leaseagreement for you that leaves nothing important out, or to review your existing agreement.

Summary

Before signing a lease, verify who is authorized to rent out the apartment and check the exact description of the apartment, the lease term, the amount and due date of the rent, advance payments for utilities, rules regarding energy consumption, the security deposit, and the options for terminating the lease. Document the condition of the apartment and its furnishings in the handover report. Also, keep in mind that not every provision in the contract is automatically valid—the Civil Code protects tenants from certain unreasonable obligations. A well-drafted lease therefore not only specifies how much and when you will pay, but also helps prevent disputes during the tenancy and upon its termination.