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Lease Extension under Czech Law

Are you renting out a property to a solid tenant with whom you’d like to extend the lease? Read on, as today’s article covers the particularities of a lease extension as well as the legal requirements of the amendment to a lease agreement. It also discusses whether or not the amendment substantially changes the lease, as well as how to terminate the lease with an unwanted leaseholder.

Prodloužení nájmu aneb dodatek k nájemní smlouvě
6 minutes of reading
9. 4. 2022

Article chapters:

Amendment to a lease agreement

Czechs generally prefer fixed-term leases, which, provided both the lessor and leaseholder wish to, need to be extended by means of a lease extension amendment when they expire. However, a special rule applies here: If a tenant continues to occupy the property for at least 3 months after the lease expired, the lease is automatically renewed. Any landlord who wishes their tenants gone must ask them to vacate the home in writing within 3 months of the expiration date. If they neglect this step, the lease is extended by the term negotiated in the lease, but by no more than 2 years.

However, the automatic renewal may be explicitly disabled in the lease, which then terminates upon expiry; the leaseholder must then vacate the property. If it’s the leaseholder who wishes to discontinue the lease, they simply hand over the property to the lessor. It’s prudent to make out a handover protocol documenting the condition in which the property is returned, and which may serve as evidence should anything go wrong.

On the other hand, some lease agreements explicitly include provisions on their default renewal. The party seeking its termination must then actively end the lease before the expiration date.

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Fixed-term versus indeterminate lease

Whenever entering into a lease, whether as a landlord or tenant, you need to agree on its type: fixed-term or indeterminate. Any lease thus undefined is deemed indeterminate, and so is a fixed-term lease with period over 50 years – with the reservation that during these first 50 years, the lease may only be terminated for reasons stipulated within it, and with the negotiated notice period.

The lessor is allowed to terminate an indeterminate lease solely for the reasons stated in the Czech Civil Code, e.g., when the leaseholder hasn’t been paying the rent over an extended time period. It comes as no surprise then, that Czech landlords prefer fixed-term leases, which allow them to rid themselves of an unwanted tenant without the standard three-month’s notice period.

Tip: Find out of what tenants should be aware when renting property.

Lease agreement amendment and raising the rent

With an indeterminate lease, the lessor may raise the rent ex parte, although they must limit the increase to no more than 20% and only once per 3 years. In addition, the rent mustn’t exceed the amount usual in the given locality.

As an entirely new lease is negotiated upon the expiry of the previous fixed-term one, the rent may be (and frequently is) adjusted as well. This is also possible with indeterminate leases, in the form of an amendment.

Of what to be aware

The Civil Code states that a written agreement may only be amended, again, in writing, which holds true for leases as well. A handshake or a confirmation by text simply doesn’t suffice.

Number the individual clauses with care, so that it’s immediately obvious to which agreement provisions they refer. Always head them as Clause 1, Clause 2, etc. However, rest assured that the failure to do this doesn’t automatically nullify or void the amendment.

Dodatek k nájemní smlouvě má své náležitosti
Any lease amendment has to conform to certain legal requirements

What must a lease agreement amendment contain?

If you’re browsing the Internet in search of a lease extension amendment template, familiarize yourself with its legal necessities first. As already mentioned, any amendments to a written agreement must be in writing. Especially landlords interested in safely renting out a flat should keep this in mind. A viva voce agreement to, for instance, extend the lease and raise the rent between them and their tenants shall be deemed invalid. The lessor will then find themselves in the situation when the lease is extended by default, but the rent remains the same.

First, specify the parties in the amendment, naming the lessor and the leaseholder. Include their full names, dates of birth and permanent residences. Subsequently, identify the original lease. For example, you might write that this amendment refers to the lease agreement signed by the above-mentioned parties on a given date. Furthermore, record which particular provision(s) the amendment modifies or replaces. The amendment will then go on to define the particular changes to the original contract, e.g., the time period by which it is extended or the new rent. Last but not least, bear in mind to include the date of effect and to sign the document.

Lease agreement amendment and a new landlord

May the lessor be represented by someone else? The parties of the amendment are those who entered into the agreement, however, they may be represented. For instance, if a company has a new agent, it’s them who signs the amendment instead of the previous one. The same goes for plenipotentiaries.

An amendment may also be signed by the original party’s legal successor, such as the heir of the let property, to whom the rights and obligations of the lease have been passed.

An example case: The lessor attempted to change an existing arrangement by an amendment

Mrs. Heda turned to us with a lease amendment drafted by her landlord that contained a provision which she thought was odd, and she was right. By means of a particular formulation, her landlord strived to void his previous consent with Mrs. Heda’s subletting the property, of which she was taking advantage.

If she had signed the amendment, the subletting would have newly violated the contract, and the landlord would have been free to terminate the lease at any time. The law considers unlawful subletting a breach of contract, owing to which the lessor may terminate the agreement prematur

Are you in doubt regarding a lease amendment? We’ll provide both counsel and assistance!

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Author of the article

medailonek-preuss

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education

  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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