Concluding an Occupational Lease
Essentials of an occupational lease
Rights and Obligations Resulting from Renting a Flat
Rent and Connected Fees
Termination of Flat Renting
Flat Exchanging
Transition of Flat Renting
Joint Flat Renting
Assignment of a Rented Flat for Compensation
Special Characteristics of Renting a Flat in the Free Market

 

RENTING

 

It is possible to rent a flat most commonly from a municipality, a town or a different owner. Renting a flat is protected by law. The basic regulation, which regulates renting a flat and various situations in connection with flat renting, is the Civil Code.

 

 

 

Concluding an Occupational Lease

 

Renting of a flat commences by concluding a written occupational lease. When concluding the occupational lease, pay great attention to its content, we recommend that you consult a solicitor prior to its signing.

 

In reality you may be offered a contract under a different title. Such a contract, if it is not contradictory to the Civil Code, is valid, but possesses less legal protection. We recommend concluding a standard occupational lease. In legal terms, the one who rents a flat and will live in it is the tenant of the flat, and the owner of a flat or a building is the landlord.

 

 

 

Essentials of an occupational lease

 

In accordance with law, an occupational lease must contain the following particulars:

1.  

   determination of a flat and its facilities and the scope of their utilisation. This means: an exact address, flat No. in the building, which floor, number of rooms in the flat, facilities (bathroom and WC), other premises which belong to the flat (e.g. balcony, cellar). The scope of utilisation means that some premises may belong to one flat, some may be common and are to be used by more flats.

2.  

   the method of calculating the rent and reimbursement for services, which the tenant and the landlord shall agree on and which relate to using the flat (e.g. heating, warm water, refuse collection - etc.)

 

 

 

It is also important to regulate the following issues:

3.  

   the method of paying the rent and reimbursement for services

4.  

   the period, for which the occupational lease is being concluded: if for a definite period of time (the date from when till when) or a indefinite period of time (the date of the termination is not stipulated, the lease continues to be valid, until it is terminated by an agreement or a notice). In the case of the occupational lease for a definite period of time, it is possible to include in the lease the possibility of its extension upon fulfilling the agreed obligations.

5.  

   any specific arrangement, which the tenant and the landlord may agree upon. It may for example, be a way of paying repairs in a flat, cleaning premises outside the flat, possibilities and terms of extending the occupational lease. However, it is not possible to agree anything that is contradictory to the provisions of law. For example, it is not possible to determine in the occupational lease a different notice period than is stipulated by law, the possibility of termination of renting the flat without the consent of the court, checking of people living in the flat by the owner, ban on inviting visitors - etc.

 

 

 

Other documents are often drawn up as annexes of the occupational lease:

•  

  the registration list is used for the calculation of the rent, and persons who live with the tenant in a flat, are specified in it. In the case of an occupational lease for a definite period of time, it is possible that the registration list is not made.

•  

  the report on handing over the flat. In the report, the date of handing over the flat and the condition of the flat (e.g. the flat equipment, the reading on water meters - etc.) is specified.

 

 

 

When handing over the rented flat, the landlord will give you keys for the flat and it is only you that may have these keys. Nobody has the right to enter the flat without your consent, with the exception of an emergency situation in the flat or in the building (see document: „Exceptional situations“).

 

You do not have to ask the landlord for approval concerning other people living in the flat. But you should notify him about how many people will be living with you in the flat. The landlord needs to know the number of persons for calculating fees for services in connection with the accommodation. These persons should be included in the registration list, which usually forms an annex of the occupational lease.

 

You may have a long-term visitor living in the flat. If your visitor has been staying for more than 3 months, you should notify the landlord about it. These extra persons in the flat will be calculated in the statement for services. If the person, who lives with you, will be paying you for the accommodation, it is a case of sub-tenancy (see document: „Sub-tenancy, hostels and non-residentials premises“). In this event, the written approval of the landlord is necessary.

 

 

 

Rights and Obligations Resulting from Renting a Flat

 

Rights and obligations of the tenant

 

The tenant has the following basic rights and obligations:

•  

  the right to live in a flat and use the common premises of the building (a cellar, loft, corridors and others) in compliance with the rules stipulated in the occupational lease

•  

  the right to make use of services in connection with using the flat (e.g. a lift, water, heat and electricity supply)

•  

  the obligation to pay the rent at an agreed amount and within the agreed period

•  

  the obligation to use the flat and the common premises of the building properly and respect the rights of other tenants and the landlord

•  

  the obligation to notify the landlord without delay about defects in the flat and necessary repairs and to tolerate restrictions in using the flat during the course of repair implementation

 

Rights and obligations of the landlord

 

The landlord has the following rights and obligations:

•  

  the obligation to hand over the flat to the tenant in a fit state for normal use

•  

  the obligation to secure the tenant with full and uninterrupted performance of the rights in connection with using the flat

•  

  the right to implement constructional adaptations in the flat, with the approval of the tenant

•  

  the right to enter the flat for the purpose of checking the condition of the flat. The tenant is not bound to let the landlord into the flat, however the landlord may ask the court to decide that the tenant must allow him to enter the flat. Not allowing the landlord entry to the flat is only wise in such cases when the landlord behaves evidently inappropriately (e.g. a sudden check at night).

 

Obligations shared jointly by the tenant and the landlord

 

Repairs in the flat:

 

Small repairs in the flat in connection with its use and costs associated with ordinary maintenance are met by the tenant. The term “small repairs” and “ordinary maintenance” are stipulated in the Decree of the Government No. 258/1995 of the Collection of Laws. Large repairs or the necessary replacement of entire items of the interior equipment of the flat (e.g. a cooker, water boiler) are the responsibility of the landlord. A different method of repair reimbursement may be agreed upon in the occupational lease.

 

If there are any necessary repairs in the flat, which are to be covered by the landlord, the tenant must inform the landlord about it immediately. If the landlord does not carry out the necessary repair despite being notified, the tenant may implement the repair at the essential scope at his own expense, and then have it refunded by the landlord. This claim must be asserted in writing within 6 months at the latest.

 

 

 

Constructional adaptations in the flat:

 

If the tenant himself wishes to implement any constructional adaptations, he must obtain the approval of the landlord in advance. Moreover, most constructional adaptations require permission from the Building Control Department.

 

Rent and Connected Fees

 

Currently there are several forms of rent: When renting a flat in the free market, you will encounter only the so-called agreed rent. The agreed rent is set by a mutual agreement of the tenant and the landlord. For older occupational leases, the mechanism of rent control is in force in the Czech Republic. In 2002 the controlled rents are regulated by the Price Notification of the Ministry of Finance No.01/2002 and a new bill on rents is expected to be adopted. In the scope of the rent control there are two types of rent:

 

a) a maximum basic monthly rent, this type of rent is commonly called “the controlled rent ”. A fixed amount of the rent per square meter is set according to the size of the town and the category of the flat. It is used for occupational leases concluded in the past, which are still in force, for flats in buildings owned by municipalities and other owners' buildings.

 

b) a materially regulated rent, a specific regulation lists costs, which may be included in the rent. This type of rent is used for new or modernised municipal flats, if the municipality was granted a subsidy from the state. It is also used for privatised municipal buildings. Members of housing co-operatives also pay rent for living in a co-operative flat. The rent is set in compliance with the Decree of the Ministry of Finance No. 85/1997 of the Collection of Laws, on Rent Payments for Flats Built in Co-operative Flat Developments and Reimbursement for Performance Provided in Connection with Using These Services (in the case of buildings erected after 1958) or in accordance with the Price Notification of the Ministry of Finance No. 01/2002 (in the case of housing cooperative buildings erected before 1958).

 

In both of these cases the rent is set in such a way so that it includes the real costs associated with a flat or building. It is then a materially regulated rent.

 

Apart from the rent for a flat, the Price Notification of the Ministry of Finance also regulates the rent for items of flat equipment and prices of services provided in connection with using a flat. The controlled rent and materially regulated rent may increase only in the manner stipulated by legal regulations. The agreed rent may increase only in accordance with the rules arranged in the occupational lease. Apart from the actual basic rent, the tenant pays rent for the flat equipment (e.g. a cooker, fitted kitchen, water boiler, gas heaters). Rules for payments for the flat equipment are stipulated in the controlled rent notification (see above). In the case of the agreed rent, these rules do not have to be applied.

 

Furthermore, the tenant pays for services, which the landlord provides to him together with using the flat: heating (if it is central heating), water, removal of waste water, refuse collection, a lift, cleaning and lighting of common premises. The tenant pays advanced payments for these services every month.

 

In some buildings, water consumption meters and thermal energy consumption meters are installed in each flat. In buildings where there are only common meters, the amount of the payment for services is set by dividing the costs of the entire building according to the number of people living in the flat or according to the floor area of the flat. Once a year, the landlord will supply a statement of these payments based on the real costs, and either reimburse the tenant for overpayment or require from him an extra payment. Rules on payments for services provided are stipulated in the controlled rent notification (see above).

 

Reimbursement for electricity and gas are usually paid by the tenant directly to the supplying organisation after he has registered himself with this organisation. Details about registering are in document: „Registration for Energy Consumption.“

 

It may also be arranged so that the flat owner is registered as an electricity and gas consumer and then the tenant pays the landlord for his energy consumption. This is often used when renting a flat in a family house.

 

Termination of Flat Renting

 

The termination of flat renting is regulated by the Civil Code. Renting of a flat may cease in the following ways:

1.  

   By expiration of the set period in the case that the occupational lease was concluded for a definite period of time. In this event the tenant is not entitled to a substitute flat or substitute accommodation.

2.  

   On the basis of an agreement between the landlord and the tenant. The agreement should be made in writing. The date of the occupational lease termination and the date of handing over the flat should be specified in the agreement.

3.  

   On the basis of a written notice of termination of the occupational lease on the part of the tenant or the landlord. The tenant may repudiate the occupational lease without stating a reason. The notice must be in writing and must contain the date on which the lease is to be terminated, which must be a 3-month period at least under the rule of law. The landlord may repudiate the occupational lease only for reasons provided by law and the court must give consent to the termination. These reasons are particularly: failure to pay rent, repeatedly violating the co-existence of people in the building, not using a flat without serious reasons, should the landlord need the flat for his own family - etc. In certain cases prescribed by law, the tenant, in the event of termination of the lease by the landlord's notice, is entitled to a substitute flat or substitute accommodation. If the notice is given for reasons not caused by the tenant, a substitute flat must be provided. In such a case the tenant may still live in the flat, for which he received the notice, until the time when the landlord has provided him with a substitute flat.

4.  

   Furthermore, the flat lease will cease, for example, by the death of the tenant (unless the lease passes over to another member of his household - see below) and also by the destruction of the flat.

 

 

 

Upon termination of renting and handing over the flat it is advisable to draw up the Handing over Report, where both of the parties confirm handing over of the flat and its condition. It is also necessary to record in the report the readings of heat and water meters, if they have been installed in the flat, along with a statement of accounting and possible debts.

 

When renting does not cease

1.  

   Renting does not cease by leaving the flat. If the tenant wishes to move out of the flat before the occupational lease validity termination he must terminate the occupational lease pursuant to the above-stipulated rules, the best way is by agreement with the landlord. Failure to do so means the occupational lease still remains valid.

2.  

   Renting does not cease if there is a change in the ownership of the flat. A new owner assumes the legal position of the former owner and he, himself, cannot modify or repudiate the occupational lease.

 

 

 

Other Statutory Provisions concerning Renting a Flat

 

Flat Exchanging

 

The tenant may exchange his flat for another flat with another tenant. In both flats, the same terms of renting should be maintained. It is necessary for both of the landlords to agree in writing to the exchange of the flats (it is not essential, if the landlord is a municipality or a different owner). Should any of the landlords disagree with the exchange, the tenant may appeal to a court and the af. rmative decision of the court will replace the consent of the landlord about the exchange.

 

Transition of Flat Renting

 

When the flat tenant dies or permanently leaves the common household, under certain conditions, flat renting will pass over to persons stipulated by law. In such cases it is not necessary to conclude a new occupational lease. These persons are: a husband or wife, children, grandchildren, parents, siblings, son-in-law and daughter-in-law, if they prove that they were living with the tenant in a common household and do not have their own flat. Other persons (not related), if they prove that they were looking after the common household of the tenant and were living with him in a common household for at least 3 years and do not have their own flat.

 

Joint Flat Renting

 

Joint flat renting by spouses is established by operation of law (and it is not decisive when the occupational lease was concluded or when the marriage was entered into). For other persons, joint flat renting may be established by means of an agreement among the existing tenant, another person and the landlord.

 

For joint flat renting by spouses, law regulates the event of a divorce. If spouses do not agree regarding the flat renting at divorce proceedings, the court will decide about the flat renting on the basis of a petition filed by one of them. The one, whose right of the common renting was extinguished, will be entitled to a substitute flat or substitute accommodation. Until he/she acquires a substitute flat, he/she may live in his/her former flat.

 

Assignment of a Rented Flat for Compensation

 

In advertisements and offers of some estate agencies in large cities, you may encounter an offer of assigning a rented flat for compensation. The compensation is a financial sum usually at the amount of several hundred thousands crowns. For this sum you will get an occupational lease in your name with a low controlled rent. The occupational lease is usually concluded for an inde. nite period of time . With these two conditions being ful. lled, paying the compensation is a financially advantageous possibility of how to get secure accommodation. If the owner of the building intends to conclude an occupational lease with you under these terms and conditions, it is dependent only on your mutual agreement. However, if you are offered a flat in this manner by its tenant, it means he does not need it any more and the right thing for him to do would be to return it to the landlord. Such a transaction is then denoted as the so-called “. ctitious exchange of a flat” or “fictitious transition of flat renting”. If the landlord (a municipality or a private owner of the flat) has a suspicion that the transaction is not in order, he will refuse to give his consent to the exchange. Such a transaction is illegal and by going through with it you run the risk of losing your money and still not becoming a flat tenant.

 

In advertisements you may also see the word “decree” (a licence to occupy a flat). In the past the decree used be a document entitling the usage of a flat. This term is not used any more and some people confuse it with an occupational lease.

 

Special Characteristics of Renting a Flat in the Free Market

 

Renting a flat on the strength of a proper occupational lease provides the tenant with a greater legal safeguard for his accommodation. The longer the period of renting is, the better it is (the most advantageous is renting for an indefinite period of time, however this method is now quite rarely used for new occupational leases). The majority of Czech citizens, who live in rented flats, live in them on the basis of occupational leases concluded in the past for an indefinite period of time with controlled rent. Only very few Czech citizens look for a rented flat in the free market, because compared with the controlled rent, this type of accommodation is very expensive. However, for foreigners, renting a flat in the free market is often the only option. Renting flats in the free market follows the principles of supply and demand and prices demanded vary widely depending on the locality.

 

Since the law exactly stipulates terms and conditions of the occupational lease and its termination, it is common practice in the free market to conclude occupational leases for a short period. Thereby landlords want to protect themselves against possible problems with a tenant, because giving notice to the tenant is very complicated. You may be offered the chance to extend the occupational lease later on by the landlord, provided there have been no problems. However if such an agreement is not explicitly stipulated in the occupational lease, it is not guaranteed in any way and the extension of the occupational lease is reliant on the good will of the landlord.

 

Also common is the landlord requiring the paying of the rent in advance (e.g. for six months). Or demanding the depositing of security, which after the rent termination, the landlord will return to you or use to pay possible debts of rent or for damages inflicted to the flat. A written contract on security must be drawn up about depositing the security.

Downloadable attachments

• A model Occupational Lease (in English) (typ: RTF, velikost: 17,5 KB)