Do you know what to remember when concluding a lease agreement for an apartment?

Chapters of the article

• From Law Practice
• What should be the elements of a lease agreement for an apartment?
• Annual utility bills and utility deposits
• Verify ownership of the apartment
• What about rent increases?
• Is it possible to increase the rent despite the tenant’s disagreement?

From law practice: The landlord wrongfully refused to return the tenant’s security deposit after the end of the lease

Husband and wife Miluše and Antonín recently moved out of their rented apartment. The tenants, who had moved out of their apartment in February 2007, had to move out of the apartment. However, the landlord did not want to release the deposit. They therefore turned to us to help them resolve this unpleasant situation.

The landlord is indeed entitled to require the tenant to deposit a cash security (security deposit) as a guarantee that they will pay the rent and hand the apartment back in good order at the end of the lease. However, the security deposit must not exceed three times the monthly rent. At the end of the tenancy, the landlord shall return the security deposit to the tenant and shall take into account what the tenant may owe him/her in respect of the tenancy. However, we have advised our clients that they are entitled not only to the return of the security deposit, but also to interest – at least at the legal rate.

What is the legal rate? In this case, the law considers the usual rates to be the rates of interest required for loans granted by banks in the place where the borrower (i.e. the landlord) resides or has its registered office at the time the contract is concluded. This is a somewhat outdated approach. Interest rates vary according to the creditworthiness of the client rather than according to the place of performance.

We helped solve the problem of the couple Miluše and Antonín. The landlord finally reached an agreement with the clients after our intervention. However, it is much better to prevent similar situations and to treat everything in advance in the contract. That is why we have prepared a list of requirements that should not be missing in the lease agreement.

What should be in the lease agreement for the apartment?

As a rule, the following are the elements of any tenancy agreement:

1. Identification of the parties: this should include the name of the tenant and the tenant, their place of residence and contact details (e.g. telephone number and email). If it is a company, then the company name, registered office address and registration number must not be missing.
2. Theexact purpose of the rented apartment or house: The exact address of the property (including the description or registration number), the floor number and the apartment number must not be missing. It is also worth specifying whether the whole property, the flat or just part of the property (e.g. a room) is being rented.
3. List of accessories (equipment): The lease agreement should include a handover report. This should include a detailed list of all the equipment included in the lease (furniture, appliances, etc.). The condition of the equipment and any specifications regarding its use.

1. Amount of rent: The exact amount and terms of payment (e.g. monthly, by date) must be stated here. Information on the refundable security deposit should also be included, including its amount and conditions for repayment.
2. Utility payment arrangements: This should indicate the services included in the rent (water, electricity, gas, internet, etc.) and how payments for these services will be made (included in the rent, separate, etc.). Rules for adjusting the amount of payments for services, e.g. according to consumption, may also be included.
3. Other obligations and determination of liability: Here the landlord’s obligations (maintenance, repairs, access to services) and the tenant’s obligations (use of the property without causing damage, compliance with house rules) can be included. There are also provisions on who is liable for damages incurred during the tenancy and the conditions for termination of the contract by both parties, including notice periods.

Annual utility bills and utility advances

Tenants are advised to have their bills submitted each year and only pay what the contract actually states. For example, contributions to the so-called repair fund are primarily the landlord’s responsibility, not the tenant’s.

The contract requires a written form. However, the landlord does not have the right to claim against the tenant if he fails to comply with the mandatory written form and only agrees verbally with the tenant. In this context, if the tenant occupies the apartment for three years in good faith that the tenancy is lawful, the tenancy agreement is deemed to have been duly concluded.

Verify ownership of the apartment

You should have the landlord prove the ownership of the rented flat, ideally with a fresh extract from the Land Registry. The main thing is to check whether the landlord is the sole owner or whether the apartment is held in joint ownership or jointly owned. If the landlord is not the sole owner, he or she needs the consent of another co-owner to conclude the contract. The right to rent can also be registered in the Land Registry, the whole situation is then more certain.

What about rent increases?

It is possible to agree in the lease agreement to increase the rent annually or, on the contrary, to exclude rent increases altogether. If the lease agreement does not contain anything like this, the landlord can propose in writing to the tenant a rent increase up to an amount comparable to the normal rent in the area. However, this is subject to the condition that the proposed increase, together with that already made in the last three years, does not exceed 20 per cent.

Is it possible to increase the rent despite the tenant’s disagreement?

If the tenant agrees to the proposal to increase the rent, the tenant will pay the increased rent as proposed, starting from the third calendar month after the proposal is received. If the tenant does not notify the landlord in writing within two months of the receipt of the proposal that he agrees to the rent increase, the landlord has the right to request the court to determine the rent within a further three months.

The court shall not grant the application after the expiry of this period if the tenant argues that the application was made out of time. On the landlord’s application, the court shall decide on the rent up to the amount which is customary in the place and time, with effect from the date of the application to the court.

In conclusion, we would like to remind you once again that an essential part of the lease agreement is the determination of the amount of rent and also the regulation of payments for services. In this case, several options are possible: the rent may already include all other costs, or the services may be paid separately – either in the form of advances or additional payments directly to the landlord or to individual suppliers. Be sure to clearly specify the amount of rent in the contract and add the due date.

Wewill be happy to prepare a property leaseagreement that does not omit anything important, or to revise an existing one