A new act on private flat renting (Act) came into force on May 1 2014. It is intended to improve the position of landlords and motivate investors to build private rental flats, and is a special piece of legislation compared to Civil Code. It means that rights and obligations of the landlord and tenant related to private flat renting will be governed by provisions of the Act. The Civil Code will be used only in cases not covered by the Act. The Act does not apply automatically; it is subject to the tenant's acknowledgement that the rental agreement is entered into in accordance with the Act. Hence, parties may still decide to use the legal regime under the Civil Code.
The Act limits flat rental to a period of two years, with the possibility of two extensions of two years each, making six years the maximum permitted maximum time period. However, it is not clear how the extension is to be interpreted, for example, whether it is permitted to extend the rental relationship more than two times but for less than two years.
|Daniel Futej||Rudolf Sivák||Radka Sláviková Geržová|
While a security deposit is common, it has now been defined for the first time in legislation. It has been defined as a security against any claims of the landlord against the tenant over: rent arrears or arrears of charges for use of the flat and amenities; damage to the flat or its fittings and furnishings; and other claims associated with use of the flat. However, the maximum security deposit is three months' rent and three months of any associated charges – a higher amount can't be agreed.
Compared the general rental rules in the Civil Code, the most significant changes relate to terminating the rental agreement. The Act lists reasons why a tenancy relationship can be terminated, whereby provisions of Civil Code will not apply. The main differences compared to rules under the Civil Code relate to termination of the agreement. For example, the landlord may terminate the rental agreement by notice if:
- the tenant is in arrears of rent or the charges associated with use of the flat for a period of more than two months. Under the Civil Code tenant has to be in arrears for more than three months;
- despite written notice of the landlord, the tenant fails to financially supplement the security deposit back up to its original amount. No such reason is listed in Civil Code; and
- there is another reason agreed in contract due to which one cannot justifiably require continuation of tenancy relationship. Under the Civil Code, parties cannot extend reasons for termination by notice.
As with the Civil Code, the landlord may withdraw from the agreement if the tenant repeatedly breaches obligations despite a written warning, if those breaches would otherwise allow the landlord to terminate the lease by giving notice.
The Act also provides better conditions for the landlord regarding legal action taken by the tenant claiming a termination of the rental agreement is invalid. The tenant now has two months in which to initiate legal action – one month less than that allowed by the Civil Code. The effects of termination or withdrawal are no longer deferred by the initiation of legal action, which is a more favourable arrangement than under Civil Code, where initiation of legal action by tenant deferred the effects of termination or withdrawal.
These more favourable arrangements can only be applied if the landlord registers with the tax authority within one month from the end of the month in which they rented the property. This condition is intended to motivate landlords to report their flat rental income.
When the lease ends, the tenant must vacate the flat at their own expense and turn it over to the landlord in good repair (accounting for normal wear and tear). If the tenant breaches this obligation and the security deposit is not sufficient to cover costs, the Act allows the landlord to retain moveable property kept in the flat by the tenant. This right of retention does not apply to items that are excluded from enforcement orders, such as clothing and footwear.
The Act does not deal with arbitrary private eviction. Without a court decision, a landlord as a private person is not allowed to evict the tenant even if they breached the rental agreement. To avoid problems and protracted judicial proceedings, prudent landlords enter not only into rental agreements with their tenants, but also have a notarial deed drawn up on eviction procedures.
Daniel Futej, Rudolf Sivák and Radka Sláviková Geržová