The usual forms of leases are as follows:

• Leases of premises used for entrepreneurial purposes (business leases)

This type of lease is a lease of a space used (or mainly used) for purposes of carrying out entrepreneurial activities. This may be premises used for production; business; services; research; administrative activities; artistic, pedagogical or educational activities; archives; garages; warehouse premises; parts of buildings accessible publicly; or apartments with respect to which a competent building office gave its consent to the non-residential manner of their use.

• Other leases

This category includes leases not comprised in the preceding list, such as leases of land plots and premises used neither for residential nor for entrepreneurial purposes.

• Leases of apartments

An apartment is defined as a room or rooms designated and used for residential purposes, forming part of a house. A tenant of an apartment is typically more protected than a tenant of premises used for entrepreneurial or other purposes, especially with regard to the termination of the lease agreement.

In general, provisions of a lease agreement are freely negotiable. Nevertheless, when negotiating terms and conditions of a lease agreement, the contracting parties are obligated to comply with mandatory provisions stipulated by applicable legal regulation. Otherwise, the provision in breach with any mandatory provision would be invalid. Such invalid provision may cause invalidity of the whole lease agreement if it is not severable from the rest of the lease agreement.

There is no maximum term for leases stipulated by applicable legislation. A lease agreement may also be concluded for an indefinite period of time.

However, if the parties conclude a lease agreement for a specific period that exceeds 50 years, the lease will be presumed to have been concluded for an indefinite period of time (in such a case, within the first 50 years, the lease may only be terminated in accordance with the termination provisions and the notice period stipulated in the contract).

A lease agreement concluded for a definite time period may be extended as follows:

• On the basis of a mutual agreement of contracting parties

A lease agreement concluded for a definite time period may generally be extended on the basis of a mutual agreement of the contracting parties (which must generally be in written form if the original lease agreement was concluded in writing) before the lapse of the agreed term of the lease agreement.

• On the basis of an automatic renewal

If the tenant uses the leased real estate after the term of the lease has expired, and the landlord does not ask the tenant to return the object of the lease within one month, it is presumed that the original lease agreement has been concluded once again (i.e., it is renewed) on the same terms and conditions as it was originally negotiated, but for a maximum period of one year. If the term of the lease was negotiated for a time period shorter than one year, the lease agreement shall be renewed for such shorter time period.

This rule of automatic renewal may be applied in the case of business leases and in the case of leases of objects other than apartments. However, its application is standardly ruled out by the parties to business leases.

• On the basis of a renewal option right of the tenant

The contracting parties may agree a “renewal option” in the lease agreement. In such a case, the contracting parties negotiate a “basic” term of the lease, after the expiration of which the tenant shall enjoy the right to ask for renewal of the lease upon agreed terms and conditions and for the term specified in the original lease agreement. Such provision is quite common in business leases.

Business leases are usually concluded for three- to 10-year terms, with an option to extend the term. It is also quite common to agree upon a break option, with a break fee in case of a premature termination of lease.

Lease agreements regarding apartments are usually concluded for a one-year term.

Other leases are usually concluded for a definite time period.

In general, there are no such instances.

However, in case an automatic renewal of the lease is stipulated in the lease agreement (please see response to “Is there a maximum term for leases? Can these be extended?”), the tenant shall enjoy the claim for such renewal. Therefore, the tenant may address a competent court with a petition for declaration of such renewal if a dispute on the existence or termination of the lease agreement in question arises between the contracting parties.

In general, any lease agreement — whether concluded for a definite or an indefinite time period — may be terminated by a mutual agreement of the contracting parties.

• Business leases

   

  Under the Civil Code, both the tenant and the landlord are entitled to terminate a business lease concluded for a definite period of time under circumstances and for breaches defined in the Civil Code. For leases concluded for a definite period of time, the statutory notice period is three months. That said, it is standard on the market to rule out the statutory termination reasons to the greatest extent possible and to determine termination reasons within the lease agreement. Termination provisions are often negotiated between the parties.

   

  In the case of a lease concluded for an indefinite period of time, any of the parties is entitled to terminate it upon a six month’ notice (or three month’ notice if there is a serious termination reason). However, if the lease has lasted for a period exceeding five years and the other party could not have foreseen the first party’s intention to terminate the lease, the notice period will always be six months.

   

• Other leases

   

  The landlord is entitled to terminate the lease agreement at any time if the tenant uses the leased premises in a way that results in greater wear and tear than usual, or if the use may cause the destruction of the premises despite a written warning delivered by the landlord to the tenant. The same applies if the tenant has not paid due rent until the due date of the next rent.

   

  If a party to the lease agreement grossly breaches its obligations and thus causes considerable damage to the other party, such other party is entitled to terminate the lease agreement without any notice period.

   

  The tenant is entitled to terminate the lease agreement at any time without notice period if the object of lease becomes unfit for the agreed purpose of use, or if no specific purpose has been agreed, for the customary purpose as a result of circumstances other than on the side of the tenant.

   

  A lease agreement for a definite period of time may only be terminated by any of the parties if it contains specific termination reasons and specific notice period.

   

  In case of a lease agreement for an indefinite period of time, the notice period stipulated by law is three months.

   

  To the extent that the abovementioned termination reasons are not stipulated (or modified, as the case may be), specifically in relation to leases of apartments and/or leases of premises used for entrepreneurial purposes, they shall also be applied in relation to leases of apartments and/or leases of premises used for entrepreneurial purposes.

   

• Leases of apartments

   

  Under the Civil Code, the tenant is entitled to terminate the lease agreement for a definite period of time, provided that the circumstances under which the agreement has been entered into have substantially changed and, therefore, the tenant cannot reasonably be required to continue the lease.

   

  The landlord is entitled to terminate the lease agreement following a three-month notice period, both in cases of a lease for a definite and for an indefinite period of time. Possible reasons for such termination by the landlord include the following:

  • The tenant grossly breaches his or her duty arising out of the lease
  • The tenant has been sentenced for an intentional crime against the landlord, against a member of the landlord’s family, against a person staying in the building in which the relevant apartment is located, or against property located in such a building
  • Because of public interest, the apartment has to be treated in a way rendering its use impossible and has to be vacated
  • There is a similar serious reason for terminating the lease agreement

   

  Additional reasons for the termination of the lease in the case of a lease for an indefinite period of time also include the following instances:

  • The apartment will be used by the landlord or his or her spouse who intends to leave the family household, provided that either a petition for divorce has been filed or a divorce has already taken place
  • The landlord needs the relevant apartment for his or her relative or for his or her spouse’s relative (applicable only to certain kinds of close relatives as set out by law)

In the two above cases, if the landlord fails to use the apartment for the intended purpose within one month after it has been vacated by the tenant, he or she is then obligated to lease the apartment again to the former tenant or to pay damages to the former tenant.

If the tenant breaches his or her duties in a particularly serious manner (e.g., has not paid the rent and the costs of the services for at least three months), the landlord is entitled to terminate the lease without a notice period and to demand that the tenant hand over the apartment without any undue delay – within one month after the lease was terminated at the latest.

No. Rent does not have to be paid in the local currency (Czech crowns; CZK).

The contracting parties are allowed to negotiate the rent in other currencies. It is common practice for commercial leases, with the most common currency being the Euro.

The parties are free to negotiate the payment of rent according to their needs – monthly, quarterly, yearly, in advance, in arrears, etc. No mandatory provisions are stipulated by the applicable laws in this respect.

In case an agreement is not reached by the parties, the Civil Code foresees monthly payments in arrears for other leases, and in advance for leases of apartments.

• Business leases and other leases

   

  The parties may agree upon an inflation clause (often known as indexation of rent). On the basis of such inflation clause, the rent shall be increased (or decreased, as the case may be) according to the terms and conditions stipulated by the contracting parties. Such increase must, however, be stipulated in such a manner that it does not violate the good morals or the principle of fair business relations, as applicable. The inflation clause is common, in particular, in business leases.

   

• Leases of apartments

   

  The rent for leases of apartments may also be increased subject to the landlord’s written proposal if the parties to a lease agreement failed to agree on a way to increase the rent and did not explicitly exclude the possibility to increase rent. The proposed increase may be up to the amount of rent that is common with regard to the relevant location at that time, provided that the proposed increase together with the increases that occurred in the past three years does not exceed 20%. The said proposal may not take place earlier than after the lapse of one year after the most recent rent increase. If the tenant does not accept such a proposal in writing within two months after its receipt, the landlord may then ask the court within the following three months to determine the rent that is common with regard to the relevant location at that time. The same procedure as above shall also be used if the tenant proposes a decrease of the rent.

• Business leases

The following is generally required of landlords:

• Hand over the premises in a condition suitable for the agreed purpose of lease and maintain the object of lease in such a condition at their own cost
• Ensure due rendering of services, the performance of which is connected with the use of the premises
• Enable full and undisturbed performance of rights connected with the lease to tenants

The following is generally required of tenants:

• Pay the rent and consideration for performances connected with the use of the premises
• Only carry out the kind of activities that correspond to the purpose of the lease as agreed in the lease agreement (this rule does not apply if such change does not lead to deterioration of the state of the building or does not unreasonably harm the landlord or other users of the building and also in case of only an insignificant change of the tenant’s activities due to the changed circumstances on tenant’s side)
• Announce to the landlord any need for repairs that are to be performed by the landlord without undue delay, and enable performance of such repairs
• Demand consent of the landlord with placement of their business signage onto the leased real estate; landlords may refuse their consent if there is a serious reason therefor (in case of failure of landlords to reply to the tenants’ request within one month, the consent is deemed to be given)
• Return premises in the condition in which they took them over, with due regard to usual wear and tear (in case of termination of the lease), and to remove their business signage

• Other leases

Landlords are generally required to hand over the object of the lease in a condition suitable for the agreed or usual use, maintain the object of lease in such a condition, and procure undisturbed use of the object of the lease by the tenant.

The following is generally required of tenants:

• Pay the rent
• Make any changes on the object of the lease only with the consent of the landlord
• Notify the landlord of any repairs needed that are to be performed by the landlord
• Take due and diligent care of the object of lease
• Enable the landlord to carry out an inspection of the object of lease and access thereto or therein to carry out necessary repair or maintenance works, upon prior notification from the landlord (such notification is not required if an action needs to be taken without undue delay in order to prevent damage)
• Within the last three months prior to the termination of the lease, enable a person interested in the lease of the object of lease, accompanied by the landlord, to perform an inspection thereof
• Return the object of the lease in a condition corresponding to the agreed use thereof or to the usual wear and tear (in case of the termination of the lease); otherwise, the landlord is entitled to claim damages

• Leases of apartments

The following is generally required of landlords:

• Hand over the apartment in a condition suitable for due use (unless otherwise agreed with tenants) and ensure full and undisturbed performance of rights connected with the use of the apartment to tenants
• Perform repairs other than minor ones in the leased apartment at his/her own cost
• Return to the tenants the monetary funds collected, including interest at least at statutory rate, to secure the due payment of the rent (after termination of the lease); the agreed amount of such security payment may not exceed six times the rent
• Allow the tenant to keep an animal inside the apartment, unless this causes inconvenience to the landlord or others within the building

The following is generally required of tenants:

• Pay the rent and consideration for performances connected with the use of the apartment
• Perform any construction work or other substantial changes of the apartment only with the consent of the landlord
• Perform minor repairs connected with the use of the apartment at their own cost
• Inform the landlord about any increase in the total number of people living in the apartment (if the tenant fails to do so within two months following the change, he or she has grossly breached the duties connected with the lease of the apartment); the parties to the lease agreement may agree that the consent of the landlord is required to accept a new person to stay at the apartment (with exception of closely related people, who are exempted from this requirement)
• Inform the landlord about any other change (decrease) in the total number of persons living in the apartment
• Notify the landlord of intent to be absent from the apartment for a period of time longer than two months, during which the tenant will be unavailable (i.e., difficult to contact); at the same time, the tenant shall designate a person who will be able to enter the apartment should it become necessary during his or her absence (in the absence of such designation, the landlord is considered to be such person); failure to comply with the notification duty is considered a gross breach of the tenant’s obligations if a significant damage arises as a result thereof
• Notify the landlord of any repairs needed that are to be performed by the landlord without undue delay
• Remove defects and impairments caused by the circumstances for which they bear liability
• Vacate the apartment within the time limits stipulated by law (in case of termination of the lease)

• Business leases and other leases

According to the Civil Code, the tenant may assign the lease agreement or sublet the object of the lease only with the landlord’s consent, which has to be provided for in writing if the lease agreement was entered into in written form. Such obligations are very often expressly stipulated in lease agreements with exceptions for affiliated entities (e.g., only requiring prior written notification). A breach of this rule is deemed a major breach of the tenant’s obligations. Furthermore, in case of a sublease, the tenant is liable for the sub-tenant’s actions as well as its own usage of the real estate.

Moreover, the Civil Code also enables the tenant of business premises to transfer the lease (as a whole) in connection with the transfer of its business activity for which the premises are used (as part of transfer of business as a going concern), subject to written consent of the landlord.

• Leases of apartments

The tenant may sublet a part of an apartment to a third person without the landlord’s consent, provided that the tenant himself or herself continues to reside in the apartment as well. Should the tenant not reside in the leased apartment, he or she may sublet the apartment or its part only with the landlord’s written consent. If the landlord does not reply to the tenant’s written request in this respect within one month, consent is deemed to be given (unless the parties explicitly agreed on the prohibition of sublease).

The lease ceases to exist by operation of law. In the event that the leased premises are partially destroyed, the tenant is entitled to an adequate rent discount or may terminate the lease agreement without prior notice (i.e., with immediate effect).

However, in case of business leases, the contracting parties frequently stipulate that the lease is not terminated by the destruction of the leased premises and that the landlord has the right to decide whether the lease will be terminated or not. Property insurance usually covers such situations.

In general, the landlord is responsible for insuring the leased premises. Nonetheless, in the case of business leases, the costs of such insurance are often “transferred” to the tenant through consideration for services that are provided in connection with the lease.

• Business leases and other leases

As a general rule, the rights and obligations arising out of the lease are automatically transferred to the new owner of the leased premises. However, as a result of an ownership transfer of the object of the lease, the new owner is not bound by the provisions stipulating the landlord’s duties other than those provided by law (i.e., the new owner is not bound by the terms and conditions of the lease agreement concluded between the transferor and the tenant). However, this restriction does not apply had the new owner been aware of the provisions of such lease agreement.

By operation of law, neither party to the lease agreement is entitled to terminate due to the change of ownership of the leased object. If the parties agree to the contrary, the landlord may terminate the lease within three months after he or she became or could have become aware of the tenant’s identity, and the tenant may terminate the lease within three months after he or she became aware of the change of ownership, both subject to a three months’ notice period.

If the new owner did not have reasonable justification to doubt the fact that he or she is purchasing an item not subject to a lease, he or she may terminate the lease within three months after he or she became or could have become aware of the fact that the premises are leased and of the tenant’s identity, subject to a three months’ notice period.

The Civil Code requires the party terminating the lease to pay a reasonable breakup fee.

• Leases of apartments

In the case of a lease of an apartment where a tenant lives, the landlord is not entitled to terminate the lease due to the change of ownership. Application of this rule may not be excluded by the agreement of the parties.

According to Czech legislation, different rules apply, as follows:

• Bankruptcy proceeding

If bankruptcy proceedings have been declared over the owner of the leased real estate, the insolvency trustee is entitled to terminate a lease, or a sublease agreement concluded by the owner of the leased real estate even in case of an agreement concluded for a definite time period. The notice period, which is stipulated by law or contractually, must not be longer than three months. The special provisions applied in case of termination notice related to an apartment must be respected (please see response to “Will the lease survive if the owner sells the leased premises?”).

• Forced public sale or auction of real estate ordered by the competent court

If a forced sale of real estate was ordered by the competent court, all leases concerning the real estate to be sold, with exception of housing leases, cease to exist as of the moment the acquirer becomes the owner of the real estate. This general rule, however, does not apply to leases where the court decides that they do not cease to exist.

The court also decides if the lease should cease to exist prior to the sale if due lease payments common according to current local standards are not being provided or if the existence of the lease significantly limits the possibility of sale of real estate in an auction.

The abovementioned rules shall also be applied in case of a forced sale of the real estate ordered by a judicial executor.