The new Civil Code will affect every business operated in leased premises. After 1 January 2014, all lease agreements will be regulated by the NCC even though they were concluded prior to its effectiveness. The current regulation will apply only to the validity of conclusion of the lease and the rights and obligations that arose before 1 January 2014.
The more detailed your current lease is, the less the legislation changes will affect you. As well as in the present, also under the NCC, it will be possible to regulate most issues differently from the NCC regulation, so if you have your rights and obligations stipulated in the lease agreement in detail, what has been agreed will apply.
However, if your lease agreement is brief and refers to statutory regulations, it will be necessary to pay attention to how the rights and obligations will be regulated after 1 January 2014, in particular, as regards termination reasons.
In connection with the termination of the lease agreement, the NCC introduces a novelty - objections to the termination notice - which will apply also to the existing agreements. If one of the contractual parties terminates the lease agreement by notice and the other party does not agree with the termination, it should raise its objections within one month of the receipt of the written termination notice. If no objections are raised, the right to claim the legitimacy of the termination notice to be reviewed at court expires. In case there are objections, the terminating party has one month to recall the termination notice. If it fails to do so, two month period for filing the relevant action commences running as of the expiry of the period for notice recall.
If the lease is terminated by notice by landlord, tenant may be entitled to compensation of the benefit incurred by landlord or the new tenant by taking over tenant´s customer base. In case of termination for material breach of tenant´s obligations, this right does not arise.
The next novelty is also related to the lease term. Lease agreed for a period longer than 50 years is considered to be a lease for indefinite period with the possibility of termination only for agreed reasons during the first 50 years. As the provision is defined as a refutable presumption, it will be possible to agree otherwise. So if you have lease agreement for a term exceeding 50 years, we would recommend concluding relevant amendment by 1 January 2014.
Changes will also affect the regulation of the passage of the lease in case of change of the property´s owner. The basic principle that the new owner enters into the rights and obligations of the landlord and that it does not constitute ground for termination remains preserved although with certain exceptions. If the lease agreement stipulates obligations to the landlord above the scope of statutory regulation, they will be binding on the new owner only in case it knew about them. Also if the new owner did not have any reason to doubt that it was buying the asset unrented, it can terminate the lease agreement by notice within 3 months it learns about the existence of the lease.
Newly, it will be possible to register the lease in the Property Register, but only with the consent of the landlord. The question is whether such registration will be possible in case of lease of a part of a building (non-residential premises), which will not be a separate unit.