Do you know the difference between rent and lease? And what are the cases for which a so-called lease is suitable? And do you know what the possible risks are? And did you know that a lease is not only a classic agricultural lease, i.e. a lease of a field for the purpose of growing various crops, but also a lease of a restaurant or a gym.
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Tenancy, tenant, rent. We’re not talking about medieval tenancy relationships, but a commitment that can be used not only for the lease of agricultural land and is commonly used today for all sorts of operations.
The lease is regulated in the Civil Code. Unlike a lease, the law emphasises the right of the tenant to receive income from the property.
A lease is an obligation where the lessor undertakes to give the lessee the right to use and enjoy the leased property in return for a lease payment. The word enjoy is important. Why? Because the usufructuary has the right not only to use the thing, but also to the fruits and benefits of such thing.
Thus, you may have come across situations where an agricultural lease or a pond lease is entered into . A tenancy agreement is most often concluded in agriculture or garden leases, but it can also be for a quarry, mine or water source.
If you’re not sure whether your agreement is the same as a lease or a tenancy, it’s worth getting it checked – the difference can make a big difference to your rights and risks.
The difference between a lease and a tenancy is that while in the case of a lease there is only a transfer of the thing (the possibility to use it), in the case of a tenancy there is also a transfer of the right to enjoy the benefits or fruits of the thing.
Thus, a lease will typically also be a lease of a restaurant which is to be operated for the purpose of enjoying the profits.
In contrast, we will then talk about a lease when, for example, a garage space is transferred (I am only using it, it is actually consumption).
| Area | Rent | Pacht |
|---|---|---|
| Purpose | Use of the item | Use + yield |
| Examples | Apartment, garage | Restaurant, field, pond |
| Yield | No | Yes (profit, fruits) |
| Testimony | Shorter | Longer, protects yield |
Tip: Learn about renting in our comprehensive guide.
So the key is what are the benefits of the lease. It is some kind of return (money, wheat, radishes). But don’t be fooled, not every benefit and fruit is seen as a dowry. Imagine a situation where you rent a house and grow radishes in your garden for your own use. In this case, it is not really a benefit and it is not a rent. It is a situation where those benefits are seen as an ancillary right, that is not the purpose of your lease. The purpose is housing. However, in a lease, it is those benefits that are key.
If you are looking for a model tenancy agreement or looking for a downloadable tenancy agreement, it is important to distinguish whether you are acting as an individual or entering into a tenancy as a corporate entity.
As far as rent is concerned, similar rules apply as for lease payments. As a rule, rent is paid monthly in arrears, or annually in arrears on 1 October in the case of agricultural leases.
Rent may also consist of the fruits or benefits of the thing leased, whatever their total extent, either by payment directly in fruits or in money. In effect, it is a commission. Both parties may also agree to increase or decrease the rent, for example, depending on the harvest.
In practice, it is often the case that a contract is mislabelled as a lease when in fact it is a lease. Typically, for example, in the case of restaurants or cafés. This then leads to problems on termination as each contract has a different regime. The most common mistake is that the parties do not address the returns and just “take a template from the internet”.
Do you need help with a lease agreement or other apartment rental-related matters? Do not hesitate to contact us. We have many years of experience with real estate leases. We will be happy to use them in solving your case.
There are relatively long notice periods for leases, but the agreement can be terminated, for example, only once a year to prevent the landlord from depriving the tenant of the proceeds of its long-term activities. So how to terminate a lease?
If the lease does not specify a notice period, termination can occur in the following cases:
If you have a lease with a three-month notice period, termination may occur in the following cases:
In the case of a fixed-termlease , it may be terminated by giving six months’ notice, even if the termination takes place at the end of the year for which the lease was concluded. An indefinite-term lease shall be terminated by giving 12 months’ notice. Of course, if you have entered into the agreement in writing, the notice of termination will also be in writing.
In our experience: We dealt with a case of a restaurant operator who was given notice by the landlord as with a normal lease. However, the court confirmed that it was a lease and the notice was invalid. The decisive factor was that the client was generating a profit from the operation.
Tip: See how to rent an apartment safely from a landlord’s perspective.
Just like a private individual, municipalities in our country can offer their property for lease. Like other leases, the city, town or borough council approves the lease agreement. While it is not very common, municipalities can offer to lease land, and the land lease agreement then follows the same rules as we have described above. We are often asked if there are any differences, so we focus on that here.
Tip: Read about landlord rent increases.
As there are cases where a sublease agreement is concluded in addition to a standard lease, a sublease agreement is no exception. Imagine a situation where, for example, a state-owned organization subleases real estate to a state university for its use and benefit. The university then subleases the real estate to an association or private party so that it does not lie fallow even temporarily.
In conclusion, it must be summarised that where there is not only the use of the property as in a traditional lease, but also the enjoyment of benefits, there is a need for a lease agreement. The disadvantage of a lease is the long notice period, but the advantage is legal certainty.
Whether terminating the lease or concluding it, a properly drafted document is key. It is therefore advisable to use a model lease agreement that contains all the important elements.
In conclusion, a lease differs from a lease in that the lessee not only uses the thing leased, but also has the right to its fruits and benefits. This obligation is used not only in agriculture but also in business operations such as restaurants and gyms. A key element of the lease is the rent, which can be paid not only in money but also in part of the proceeds. Lease agreements have longer notice periods than rental agreements, which provides stability for the tenant. A lease can also be concluded on municipal land or through a sublease agreement. Therefore, if the contract includes not only the use but also the economic use of the property, it is a lease, not a rent. When concluding a lease agreement, it is a good idea to use tried and tested models. If you are not sure what such an agreement should look like, you can use a model lease agreement that meets your specific needs
The key is whether you are entitled to the proceeds (e.g. profits from the business or fruits). If so, it is a rent.
Yes, but for more complex relationships, a written contract is essential for evidence.
No, the rent can also be a share of the revenue (e.g. a percentage of the profit).
Usually not. Notice has statutory deadlines and is often tied to the end of the financial year.
Then there is a risk that it will be treated as rent, even if you have marked it as a lease.
Yes, municipalities routinely lease land or property.
This is a situation where the lessee transfers the property to another person (with the owner’s consent).
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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.
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