3.1 Internal maintenance, decoration and repair?
The landlord must provide premises suitable for the purpose of the lease. Internal maintenance, including demising walls, ceilings, floors, all equipment, doors, windows, electrical, mechanical, plumbing, heating, ventilating, air conditioning, security systems, fire prevention, sprinkler systems, is usually the responsibility of the tenant.
3.2 External maintenance, decoration and repair?
Landlords are usually responsible for maintenance and repair of the building structure, exterior walls, roof, main common utilities and ventilation systems, and surroundings of the building (gates, communications, etc.), unless the damage is caused by tenant.
3.3 Structural repairs?
Landlords are usually responsible for structural repairs. The tenant may not modify structural parts of the premises/building without the landlord’s prior approval (mainly written).
3.4 Insurance?
In the case of a lease of commercial premises, the landlord usually maintains property insurance for replacement costs of the building. Landlord insurance costs are usually recovered through outgoings payments. The tenant is usually required to have all risk property insurance for its property installed in the premises and liability insurance for certain minimum coverage. In the case of a lease of entire buildings, tenants are asked to provide full coverage for all risk insurance and liability insurance.
3.5 VAT?
If the landlord is a registered VAT payer, 19% VAT is charged on rent and service charges.
With respect of partial/repeated deliveries of goods or services, if a delivery is partial/repeated, the goods or services are considered delivered (i.e. tax obligation occurs) on the last day of the period (according to the previous version of the relevant Act the delivery was made “no later than on the last day”), to which the payment for the repeatedly or partially delivered goods or services applies.
If, for instance, under a lease agreement the tenant pays rent on a quarterly basis, according to the new regulation, the date of delivery is the last day of the relevant quarter and the rent payment made for instance before the start of the relevant quarter is then considered a payment made before delivery – i.e. the landlord will be obliged to issue an invoice for such accepted payment, based on which invoice the tenant can apply tax deduction. The second alternative is that the landlord will not issue the invoice and the tenant will be entitled to apply the tax deduction, but no sooner than on the last day of the relevant quarter.
3.6 Rates?
In good commercial leases (triple net leases), landlords include all payments in connection with the lease into the service charges/outgoing payments.
3.7 Other typical outgoings?
In good commercial leases (triple net leases), tenants are required to pay for all outgoings, including utilities (water, sewage, power, lighting in common areas), reception services, security services, landlord’s insurance, costs of repairs, replacements, modifications, administration and management costs and general maintenance, repair and replacements. Tenants often pay advance payments on a monthly or quarterly basis, based on the landlord’s estimate of the cost of outgoings. Usually once a year, the landlord provides for reconciliation of the advance payments and actual cost of outgoings.
3.8 The ability to recoup any landlord outgoings (including management costs) by way of service charges?
Landlords usually include outgoings in the service charges. The payments for outgoings/service charges are usually paid in advance on the basis of the landlord’s estimate. After reconciliation is made, the tenant must immediately pay any outstanding amounts; in case of overpayments by the tenant, the overpayments may be set off against the next outgoings payment. The tenant’s financial obligations (including rent and outgoings) are secured by a security deposit, bank/corporate/parent company guarantee or, if necessary, other sanctions (e.g. right of the landlord to terminate the lease).
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