Chapters of the article
Pachter, propachter, charterer. It sounds a bit like a tongue-twister from the Middle Ages, yet these terms belong to contemporary law. Pact has its roots in ancient Rome, but its basic essence remains the same today.
What is a pact
A lease is very similar to a tenancy in some ways, but with one major difference. A lease is created when the owner of a property, or the lessor, decides to let the property to the lessee for use and enjoyment in return for a rent. In this sentence, the word use is particularly important to distinguish a lease from a tenancy.
In a traditional lease, the landlord gives his tenant the property only for use – that is, the tenant can live there or perhaps run a business. On the other hand, in the case of a lease, the property can not only be used but also occupied – the lessee receives a product or financial gain from the property. A typical example is the lease of a field, where the lessee is then able to use the crops grown. Similarly, it is also possible to enter into a lease for a restaurant or a factory, where the lessee also receives a financial profit from the operation of these facilities.
In order to constitute a lease, the products or money obtained from the property must be the first priority. This means that if you are renting a house with a garden with tomatoes growing in it, it cannot be a tenancy because the products in the form of tomatoes are secondary, the primary use of the house is for living.
How a lease agreement works
Terms of the lease agreement
A tenancy agreement is concluded between the landlord and the tenant for the use and enjoyment of a certain asset (most often real estate), with the tenant being obliged to manage it properly. In the case of agricultural land, the money for the lease or rent is usually paid once a year on 1 October. If the lease is, for example, in the form of a restaurant, it is paid in the same way as rent, usually once a month.
It is common practice that the rent is not paid in money but in kind. If you have a lease on a piece of forest land, you can pay in wood or, in the case of a field, in what you grow on it. If it is a variable yield item, it is usual to adjust the price of the lease according to the total production. So, for example, if it is a very dry year and there are fewer potatoes than in previous years, the rent should also be reduced to match the size of the crop.
Termination of the lease agreement
As regards the termination of a lease agreement, there are significant differences from a lease agreement. It is much more difficult to terminate a lease. If the lease relates to agricultural land, termination is usually only possible once a year after the harvest time, so that the lessor cannot deprive the lessee of the fruits of his year-long work. Long notice periods are also typical.
If no notice period is specified in the contract, the contract can be terminated for two reasons. The first such reason is that the lessor has breached the rules of the contract, for example, by subletting the leased property or changing its economic purpose without the prior consent of the lessor. Another possible reason is if the lessor discovered damage to the asset of which he was unaware and which caused a significant decrease in the proceeds of the asset.
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If the lease agreement specifies a notice period of 3 months, then termination is possible either in the event of the death of the lessee or in the event of the lessee’s incapacity.
If you have signed a fixed-term lease, then the notice period is 6 months. However, it is a condition that the contract is terminated at the end of the year for which the contract was signed. In the case of an open-ended lease, the notice period is set at 12 months.
It should also be mentioned that, just as there is a sublease agreement alongside a lease agreement, there is also a sublease agreement for a tenancy agreement. In this case, the tenant enters into a contract with a third party to sublet the property. A typical case is the sublease of state property to an institution, which then subleases it to someone else for a certain period of time.
What makes a forest specific
A forest is a very specific type of land. Even though you own it, you cannot dispose of it as you please. In addition, owning it comes with a number of responsibilities. First of all, it is important to say that even the owner of a forest cannot cut down whatever he wants and whenever he wants. Timber harvesting is restricted by law, which states that the forest must not be thinned below the permissible limit. In addition, the so-called ‘random logging’ must be observed, which consists of prioritising the felling of damaged trees. Similarly, logging must not exceed a cutting size of more than 1 ha. The whole process is supervised by a professional forester.
It is also not possible to turn the forest into a private plot of land that you do not allow anyone to enter. Forest land is encumbered by a certain easement, which allows access to all people who can collect mushrooms, berries or bark. The only exception to this is for forest protection, health or safety – for example, the classic forest nursery fence. The forest owner’s obligations are to look after the forest and maintain its good condition. The owner is thus obliged to plant trees in the forest, get rid of diseased trees, etc.
Because of these specificities of forest land, lease agreements also need to be adapted. Unlike farmland or restoration, forest is a fragile ecosystem that has been formed over hundreds of years. This should be matched by its protection by the leaseholders. Forestry companies whose main interest is profit most often negotiate forestry contracts. And profit naturally arises from harvesting as much timber as possible. On the other hand, it is in the interest of the logger and indeed all nature lovers and forest walkers to preserve the forest and keep it as healthy as possible.
For this reason, a carefully drafted contract is needed which sets out as a rule the careful management of the forest, but also provides sufficient profits for the perpetrator. Such a contract should therefore set out in detail the rules and restrictions on harvesting for the tenant and include, for example, some form of control by the landlord. After all, it is ultimately in everyone’s interest to maintain healthy forests.
So, whether you are going to lease your forest land or are in the opposite role to the lessee, do not rely on downloaded model lease agreements from the internet. A forest lease has specifics that need to be contracted for, which you won’t find in the templates. If you choose our services, we can guarantee reliable and professional negotiations. In addition, you will settle everything quickly and without having to travel anywhere.