Commercial leases in the Czech Republic are governed by the Civil Code, with a distinct set of provisions applying to premises used for business purposes. Compared with residential tenancy, where much of the regime is protective and mandatory, commercial leasing leaves considerably more to the parties, which means the drafting carries correspondingly more weight.
Term and termination
The first structural question is whether the lease runs for a fixed term or indefinitely, because the exit rights differ substantially. An indefinite lease is generally terminable on notice by either party, with statutory notice periods applying where the parties have not agreed otherwise. A fixed term gives certainty and restricts early exit, which is an advantage or a trap depending on which side of it you are on. Break rights, if wanted, have to be drafted; they are not implied.
Rent and its adjustment
Rent is freely agreed. What is not automatic is indexation: unless the lease provides a mechanism, rent does not rise with inflation, and a great many disputes have followed from an indexation clause that named an index imprecisely or failed to say who calculates it and when. Service charges are a separate head from rent and should be defined as to what is included, how they are apportioned and how they are reconciled.
- Define the premises precisely. Area, measurement standard and what is included beyond the demised space.
- Allocate repairs explicitly. Who maintains what is the most common source of ongoing friction.
- Address fit-out and reinstatement. What the tenant may install, and what must be removed at the end.
- Deal with assignment and subletting. Silence is not the same as permission or prohibition.
Security and transfer of the business
Landlords commonly require a deposit or a guarantee, and the terms on which security may be drawn down and must be replenished belong in the lease rather than in correspondence. A related question worth settling in advance is what happens if the tenant’s business changes hands, since the Czech concept of the transfer of a business establishment can carry lease rights with it in ways the parties may not have anticipated.
Registration and third parties
A lease may in appropriate cases be recorded in the cadastral register, which affects its position against a subsequent purchaser of the property. Whether to do so is a commercial question, but it is one the parties should decide deliberately rather than by omission, particularly where the tenant is investing substantially in fit-out.
Because the Civil Code leaves so much of a commercial lease to the parties, the document really does govern the relationship. A short lease is not a simple lease; it is one in which the questions that were not addressed will be resolved later, more expensively, and by someone else.
This article is general information about Czech law and is not legal advice.