Lease Agreement – Rights, Obligations, and Legal Protection
By a lease agreement, the lessor undertakes to deliver a certain item (movable or immovable) to the lessee for use, and the lessee undertakes to pay the lessor a specified rent. The lease agreement is one of the most common legal instruments in the trade of real estate and commercial premises, and it is subject to detailed regulation under the Obligations Act. If the lease is regulated by special laws (e.g., lease of commercial premises owned by local government units), the provisions of the Obligations Act apply subsidiarily.
I. Obligations of the Lessor
Delivery of a proper item (Art. 521) The lessor is obliged to deliver the item to the lessee in proper condition, together with all its accessories. The item is considered proper if it corresponds to the agreed condition or purpose arising from the circumstances.
Maintenance of the item (Art. 522) The lessor is obliged to:
maintain the item during the lease term,
perform necessary repairs,
reimburse the lessee for necessary expenses which the lessor would have had to bear.
Minor repairs and costs of regular use are borne by the lessee.
Right to terminate or reduce rent (Art. 523) If repairs significantly interfere with the use of the leased item, the lessee may:
terminate the agreement,
request a proportional reduction of the rent due to limited use.
Prohibition of alterations without consent (Art. 524) The lessor must not make changes to the leased item without the lessee’s consent if it would affect its use. In case of reduced functionality, the rent is reduced.
Liability for material defects (Arts. 525–528) The lessor is liable for:
all defects that reduce the usability of the item,
legal defects (e.g., when a third party claims rights to the item),
damages caused by failure to inform the lessee about known defects.
Liability cannot be excluded by contract if the lessor intentionally conceals defects or abuses a monopoly position.
II. Obligations of the Lessee
Use of the item in accordance with the agreement (Art. 532) The lessee must:
use the item with the care of a prudent manager,
respect the agreed purpose of the item,
be liable for damages caused by unauthorized use (including if caused by a sublessee or a third party).
Payment of rent (Art. 534) Rent is paid:
according to the contract or law,
if not otherwise specified, semi-annually for leases of one year or longer, or at the end of the lease term for shorter periods.
Termination due to non-payment (Art. 535) If the lessee does not pay rent even after 15 days from a reminder, the lessor may terminate the contract. The contract remains valid if the rent is paid before termination.
Return of the item after the lease (Art. 536) The lessee is obliged to:
return the item in the condition in which it was received, except for normal wear and tear,
remove additions made by the lessee if this can be done without damage,
compensate for damages caused by unlawful use.
III. Sublease – when allowed and how it works
Right to sublease (Art. 537) The lessee may sublease the item if:
not otherwise agreed,
it does not harm the lessor.
The lessee guarantees that the sublessee will use the item in accordance with the main lease agreement.
Consequences of unauthorized sublease (Art. 538) If the lessee subleases without permission, the lessor may terminate the contract.
Direct collection from the sublessee (Art. 539) The lessor may directly claim payment from the sublessee for receivables due from the lessee.
Termination of the sublease (Art. 540) The sublease automatically ends when the main lease ends.
Our legal team can assist you with drafting and reviewing lease agreements, legal advice on protecting the rights of lessors and lessees, legal assistance with lease termination, non-payment of rent, subleasing, and other related issues.
