Czech law recognises only one type of lease based on the regulations which govern leases in the Czech Civil Code. Such leases may be entered into for limited or for unlimited periods of time. Leases of residential real estate are governed by the general and special provisions on lease agreements in the Code. The Czech Civil Code also includes special provisions for leases of premises used for business purposes.
Czech law also recognises a separate right in rem to use property for a certain period of time, as well as the leasehold right, which provides the beneficiary not only with the right to use but also a right of receive profits from the property.
Last modified 22 Mar 2024
The usual length of a lease depends on the nature of the lease.
Retail, warehouse and office leases generally last between five and 15 years with a break option halfway through the term.
There is no typical length for leases of manufacturing facilities. These vary depending on the nature of the business.
Last modified 22 Mar 2024
Leases of real estate are governed by the Civil Code, which contains general rules as well as special provisions for real estate and its use. There are specific provisions for residential property, premises used for business purposes and ancillary facilities.
Last modified 22 Mar 2024
Leases granted for a fixed term may be renewed automatically if, after the term expires, the tenant continues to use the premises and the landlord does not require the tenant to vacate the property within three months from the termination of the lease. In these circumstances, the lease will be extended by a period of two years, where the original fixed term exceeded two years, or by the original term of the lease where this was less than two years. The lease will be extended for rent and under the conditions originally agreed in the lease agreement. This automatic renewal of a fixed term lease applies to residential leases and also for commercial leases.
Last modified 22 Mar 2024
If the lease is terminated and the tenant fails to vacate the premises, the landlord may require the tenant to vacate the premises within one month from the termination of the lease. Should the tenant fail to vacate the premises, the landlord may seek a court order to enable possession to be recovered. This can take from several months to several years.
Should the tenant use the premises after the lease expires, automatic renewal of the lease does not apply where the tenant previously indicated that it would terminate the lease.
Last modified 22 Mar 2024
The lease can be terminated early if the landlord gives notice of termination for reasons specified by law or in the lease agreement. Withdrawal from the lease agreement is also possible if this is provided for by law or in the lease agreement.
Last modified 22 Mar 2024
Termination by a third party is fairly unusual. The lease will be terminated in some circumstances if the property is expropriated. Expropriation is generally subject to compensation, payable by the expropriator. The lease may also be terminated by an insolvency administrator.
Last modified 22 Mar 2024
The parties may agree on any guarantee permissible under Czech law. A deposit of three to six months' rent and service charges or bank guarantee in the same amount is standard.
Under the Civil Code, certain guarantees are automatically provided in favour of the landlord. Where the tenant has defaulted on the rent, the landlord may be entitled to seize certain (movable) assets belonging to the tenant, located on the leased property, as security for payment.
Last modified 22 Mar 2024
The tenant is entitled to use the premises for the purposes agreed on in the lease or, if there was no agreement in that respect, for the usual purposes. The tenant must always comply with a purpose of the use as approved or granted by the occupancy permit or consent issued by relevant building authority (if a building or its part is subject to the lease) and with all other relevant regulations applying to usage. The tenant has exercise due care.
Last modified 22 Mar 2024
Not unless the parties have agreed otherwise. Any alterations to the premises require the prior consent of the landlord. The tenant may require reimbursement of costs connected with such works only if the landlord has agreed to this. If the landlord approves the alterations but has not agreed to reimburse the costs, the tenant may, after the termination of the lease, claim compensation equal to the increase in the value of the asset.
Where alterations are made by the tenant, one of the following arrangements will normally apply in practice:
Last modified 22 Mar 2024
The tenant may sublet the premises or transfer rights and obligations to a third party only with the landlord’s consent. The form of the consent must be the same as the form of the lease agreement. If the tenant gives a third person the right to use the leased property without the necessary consent, this is deemed to be a substantial breach of the tenant’s obligations.
For business premises, the tenant is entitled to transfer a lease of the premises in connection with the transfer of the business activities carried on at the premises with the prior written consent of the landlord; an obligatory written form is required for a transfer agreement.
Finally, the lease may be subject to a transfer of the tenant’s enterprise. An enterprise usually includes all business activities, assets, other values, employees, etc, ie anything that can be operated as a business unit. A lease can be significant part to it. If the lease is transferred along with those assets as a part of the enterprise, no landlord’s consent is required.
Last modified 22 Mar 2024
During the term of the lease, rent may be increased if this is provided for in the lease agreement. This usually happens as a result of a provision for indexation of the rent (linked to the rate of inflation) or a market rent review. arket rent review.
Last modified 22 Mar 2024
It is entirely up to the parties how they regulate the rent review.
Last modified 22 Mar 2024
Generally, renting real property is exempt from VAT except for short-term leases of real property, leases of parking spaces or areas, leases of security deposits and leases of machines and other attached equipment. However, in lease relationships between VAT payers, VAT may be charged on rent from commercial premises at 21%.
Last modified 22 Mar 2024
A security deposit or a bank guarantee and deposits for rent and/or utilities may be required.
Last modified 22 Mar 2024
This is decided by agreement between the parties. Each tenant is normally required to pay a proportion of these costs, calculated according to the size of the unit held.
Last modified 22 Mar 2024
The tenant is obliged to inform the landlord immediately when any repairs that are the responsibility of the landlord are necessary. A tenant who fails to do so is responsible for any damage resulting. If the tenant has reported a defect, but the landlord fails to repair it and such inaction causes damage to the tenant, the tenant has the right to claim a discounted rent. Where the tenant has spent money on repairs which were the landlord’s responsibility, the tenant has the right to be reimbursed these costs if the repair was performed with consent of the landlord or if the landlord failed to carry out the repairs without undue delay after having been informed about the necessity of the repairs. In other circumstances, the tenant may only claim the increase in the value of the landlord’s asset.
Last modified 22 Mar 2024
Each tenant is normally required to pay a proportion of the utility costs, calculated according to the size of the unit held.
Czech law makes a clear distinction between rent and common expenses and it is not possible to incorporate common expenses into rental charges.
Last modified 22 Mar 2024
The cost of insurance is usually met by the landlord and the insurance policy is taken out in his name unless the parties agree otherwise. The insurance policy usually covers fire, explosion, flood, impact by plane, landslip and other natural disasters and insured risks.
Last modified 22 Mar 2024
What is the usual length of each type of commercial lease?
The usual length of a lease depends on the nature of the lease.
Retail, warehouse and office leases generally last between five and 15 years with a break option halfway through the term.
There is no typical length for leases of manufacturing facilities. These vary depending on the nature of the business.
Last modified 22 Mar 2024