Legal regulation of lease of buildings, construction work and installations

The vast majority of companies, in one way or another, use buildings, premises or other real estate while running their businesses. Newly established companies often need to answer the question of whether to lease or purchase the premises for the company office or for the production or any other related activity. This article shall briefly review the general provisions of the legal regulation for the lease contract, and in particular for the lease of buildings, construction work and installations.

The concept of the contract of the lease is defined in the Civil code of the Republic of Lithuania. According to the code, under a lease contract, one party (lessor) shall be obliged to grant to the lessee some item, in return for payment, for temporary possession and use, and the other party (lessee) shall obligate himself to pay a lease payment. The Contract shall indicate the item or its features, enabling one to define the item which is to be transferred by the lessor to the lessee. In the absence of such features in the contract, and if the subject-matter of the lease contract cannot be determined according to other features, the lease contract shall not be considered concluded.

Also, it shall be noted that a lease contract must be concluded in written form. The period of a contract may be fixed-term, or concluded for an indefinite period, but in all cases the period of lease may not exceed one hundred years. The period of a lease contract shall be determined by the agreement of the parties. If the period of the contract has not been determined in the contract, the lease contract shall be considered to have been concluded for an indeterminate period. If the lease contract is indeterminate, both of the parties shall have the right, at any time, to repudiate the contract having warned the other party three months in advance.

The main duties of the parties are, delivering the property to the lessee from the one side, and obligation to pay the lease payment on time from the other side. The lessor shall be obliged to deliver property to the lessee in the state corresponding to the conditions of the contract and designation of the property. The lessor is bound to guarantee that the item is fit to be used for the purpose for which it is leased throughout the whole period of the lease. The lessor shall not be held liable for the defects of the property leased, which were stipulated by him when concluding the contract. The lessor is also obliged to deliver to the lessee the documents relating to the item leased and appurtenances thereof (technical passport, certificate of quality, etc.) which are necessary for the use of that item, unless otherwise provided for by the contract.

The lessee is obliged to pay the lease payment on time. Unless otherwise provided for by laws or the contract, he shall have the right to demand a commensurate reduction of the lease payment if, due to circumstances for which he is not responsible, conditions of the use of the item established in the contract or the state of the item have essentially gotten worse.
Also, it shall be noted that under a lease contract for buildings, construction works and installations, the rights of the use of that part of the land plot which is occupied by the relevant buildings, construction works and installations and is necessary for the use thereof, in accordance with their designation, shall pass to the lessee simultaneously with the transfer of the subject-matter of lease.

In the event where the lessor is the owner of the land plot on which the leased buildings, construction works or installations are situated, the land plot shall be provided for the use of the lessee under the right of lease, or on any other right stipulated in the lease contract of buildings, construction works and installations. In the event where the rights of the lessee to the land plot occupied by the relevant buildings, construction works or installations are not determined in the lease contract of buildings, construction works and installations, it shall be deemed that the lessee is granted, for the period of the lease of the respective fixed property, the right to use, gratuitously, that part of the land plot which is necessary for the use of buildings, construction works and installations in accordance with their designation.

These are the general provisions of the lease contract. The best way to ensure the proper representation of the rights concluding the particular lease contract is to consult a lawyer.