Leasing and Living in Non-Residential Premises

Quick Overview

Living in a non-residential space is a legally sensitive issue. A lease agreement itself is not necessarily invalid simply because the space has not been approved as an apartment. Under the Civil Code, the parties may agree that a space other than a residential one may be leased for living purposes. However, a problem may arise under building code regulations, as the space must be used in accordance with the purpose specified in the occupancy permit or in the building registry.

Before signing such a contract, have it verified to ensure you understand exactly what you are signing. At Dostupný advokát, we will review your lease agreement and alert you to any provisions that could lead to a dispute with the landlord or the authorities.

As the name suggests, non-residential spaces are spaces intended for non-residential purposes. These may include offices, stores, manufacturing facilities, garages, etc. The building authority determines the specific use of the space based on the occupancy permit.

Lease Agreement for Non-Residential Premises

The format of the lease agreement will likely be the same or very similar to a standard residential lease agreement. A lease agreement for non-residential premises should include:

1. Identification details of both parties: First name, last name, date of birth, permanent address, and, if applicable, the tenant’s and lessor’s ID number or company name.
2. Subject of the agreement: A precise description of the property covered by the lease. This includes all essential information from the land registry and a description of all equipment included in the lease.
3. Term of the agreement and termination: The agreement may be entered into for a fixed or indefinite term. In both cases, however, the agreement should include rules for terminating the lease of non-residential premises and the length of the notice period.
4. Price: The contract should also include the rent amount and a description of what is included in it (e.g., whether utilities and services are included in the rent or if the tenant pays for them separately). It should also specify how and when the rent is to be paid.
5. Other Rights and Obligations: The contract may also include the rights and obligations of both parties. It may also include contractual penalties for non-compliance.

It should also be noted that the new Civil Code states the following:“If the landlord and tenant agree that a space other than residential space will be leased for habitation, the parties are bound by the same obligations as if residential space were leased.”Therefore , when non-residential space is used for residential purposes, both the tenant and the landlord have the same rights and obligations as in a standard residential lease.

However, this does not mean that non-residential space automatically becomes a residence. This rule primarily protects the relationship between the tenant and the landlord, such as issues regarding rent payment, termination, the rights and obligations of the parties, or tenant protection. However, it does not in itself address whether the space meets the technical, sanitary, and safety requirements for housing. This is where the most common misconception arises: a valid agreement with the landlord does not necessarily mean that the space is safe to use as a residence.

For non-residential spaces, it is particularly important that the contract matches how you will actually use the space. If the contract states that the space is, for example, an office or business premises, but you are actually living there, this can later complicate the resolution of defects, termination, utilities, insurance, and communication with the building authority. The landlord may also try to claim that you used the space in violation of the lease.

With contracts like this, it’s worth addressing not just the rent amount, but also the purpose of use, liability for defects, repairs, utilities, the security deposit, and termination. Send us the contract for review before signing—we’ll point out risky wording and suggest changes that will better protect you.

From the practice of Dostupný advokát

In practice, we often see tenants focusing primarily on a lower rent and only later realizing that the space is unsuitable for long-term living. A typical problem arises when mold, poor heating, noise, inadequate ventilation, or disputes over repairs occur. The landlord then sometimes argues that it was “merely” a non-residential space, while the tenant expected protections similar to those in an apartment lease.

For example, we handled a case involving a tenant who rented a studio with the intention of living there on a regular basis. However, the contract did not clearly state that the space was intended for residential use, and it lacked provisions regarding defects, services, and termination of the lease. When problems with moisture began and the landlord refused to make repairs, it was much more difficult to prove what the parties had actually agreed upon. That is precisely why we recommend clearly specifying the purpose of use and responsibility for the condition of the space in the lease agreement.

Who is responsible for minor repairs to commercial premises

A frequently asked question regarding the lease of non-residential spaces is who is actually responsible for repairs—the tenant or the landlord?

The rules are the same as for a standard residential lease. This means that the tenant is responsible for minor repairs and routine maintenance. This includes, for example, regular cleaning, keeping appliances in good condition, or minor repairs to bathroom fixtures. Generally, repairs and maintenance costing less than 1, 000 crowns are paid for by the tenant.

The landlord, on the other hand, covers major repairs and maintenance that exceed 1,000 crowns. This may include replacing broken appliances, installing new flooring, or replacing a broken window. The landlord is obligated to maintain the property in a condition suitable for use. Therefore, they are also responsible for issues related to energy and utility services.

Not sure whether the tenant or the landlord should pay for the repair? Send us the lease agreement and a description of the issue. We’ll assess whether it’s routine maintenance, a minor repair, or the landlord’s obligation to keep the property in a condition suitable for use.

Rental Rates for Commercial Space

Rental prices for commercial spaces are often significantly lower than those for residential spaces. However, the total price depends on many factors:

• Location: Commercial spaces are particularly inexpensive in areas where there isn’t much demand for them and they aren’t widely used.
• Intended Use: Another important factor is the intended use of the space. For example, if you’re comparing office space to a clothing store, the office will likely be cheaper because it doesn’t have the same potential to generate profit.
• Size and layout: Logically, as the size increases, so does the price. As for the layout, the quality of the layout and the efficient use of space play a key role here.

Is it possible to live in non-residential spaces?

When it comes to the legality of living in non-residential spaces, the laws aren’t entirely clear. It’s a sort of gray area where the new Civil Code permits living in non-residential spaces, but the Building Code prohibits it. In practice, this is often handled by simply not addressing the issue. Whether it’s worth the risk of potential fines is therefore up to you.

Practical Checklist

Before signing, verify:

• what purpose the space is approved for,
• whether the contract explicitly states that you will use the space for residential purposes,
• who pays for repairs, routine maintenance, and major defects,
• whether you can establish permanent residence at the property,
• what the notice period is and when the landlord can terminate the lease,
• whether the lease contains unreasonable contractual penalties,
• whether utilities, energy, and billing are clearly defined.

Before you sign the contract, send it to us for review. We’ll point out any risky provisions and suggest specific changes so the contract matches how you’ll actually use the space.

Pros and Cons of Living in a Non-Residential Space

Advantages

• Price: Non-residential spaces are typically rented or sold at lower prices than residential spaces.
• Unique spaces: Many non-residential spaces offer a truly unique design that you won’t find in traditional apartments. These often feature high ceilings, exposed beams, industrial elements, or large windows.

Disadvantages

• The Space Itself: The non-residential space itself can be a drawback. These spaces often suffer from a lack of natural light, poor ventilation leading to mold growth, high heating costs, poor acoustics, or excessive noise. However, this is not always the case, so it is important to choose carefully.
• Permanent residence: It is not possible to register a permanent residence in non-residential spaces. As an alternative, however, you can register your permanent residence with your parents or at the city hall. Currently, there are also a number of services that allow you to register your permanent residence at a specific address, where you will also receive your own mailbox.
• Mortgage: If you decide to purchase a non-residential space, expect that the bank will not grant you a mortgage for it. The only exception is if you plan to convert this non-residential space into a residential one. Even in this case, however, you won’t be successful with all banks. An alternative option is an American-style mortgage, where you don’t have to specify the purpose of the funds.

How to Convert Non-Residential Space into Residential Space

If you’re planning to buy non-residential space, you might be wondering whether it would theoretically be possible to convert it into residential space. The answer is yes, but it’s not that simple.

First and foremost, you need to ensure that the non-residential space is suitable for living. The building authority will tell you whether it meets the requirements for residential use. If the non-residential space meets the housing parameters, you will need to file a notice of change of use. This notice should specify the nature, scope, and consequences of the change. It should also include documentation that clearly shows what the change will entail. In some cases, you may also need to provide decisions from the authorities affected by the change.

If the building authority decides that your non-residential space does not meet the criteria for residential use, it will also specify what needs to be changed. For you, this means you will have to obtain a building notification or permit and renovate the property. Only after the renovation is successfully completed and the deficiencies are corrected can you apply for reclassification.

Summary

Living in non-residential spaces may be cheaper than renting a traditional apartment, but you need to be aware of the legal and practical risks. A lease agreement is not automatically invalid simply because the space is not residential, as the Civil Code permits agreements regarding the use of non-residential spaces. However, from a building code perspective, the space must be used in accordance with its intended purpose. Before signing the contract, therefore, verify the occupancy permit, intended use, repair rules, utilities, termination, security deposit, possibility of permanent residence, and any conditions for converting the space into an apartment. If you are unsure, have a lawyer review the contract before committing to a lease or purchase.