Overview of retail lease agreements in North Macedonia

• The retail leases in North Macedonia are regulated by:
• Law on Contacts and Torts (Official Gazette of RNM no. 18/2001, as amended);    
• Law on Personal Income Tax (Official Gazette of RNM no. 241/2018, as amended); 
• Law on Value Added Tax (Official Gazette of RNM no. 44/1999, as amended);
• Law on Real Estate Cadaster (Official Gazette of RNM no. 55/2019, as amended)

There is no prescribed minimum or maximum duration. Leases can therefore be granted for limited or unlimited period. The lease concluded on definite period expires with expiration of the concluded period. Lease agreements concluded for a definite term are considered to be converted into a lease for an indefinite term if the tenant continues to use the leased premises after the expiry of the initially agreed definite term.

The Law on Contracts and Torts provides that lease agreements concluded for an indefinite term may be terminated at any time (except an inopportune time), while definite-term lease agreements may only be terminated on statutory grounds and on the grounds specified in the relevant lease agreement.

If the tenant, after being warned by the landlord, continues to use the premises contrary to the lease agreement or its purpose or neglects its maintenance, and there is a risk of significant damage to the landlord, the landlord may terminate the agreement without notice period.

The landlord can terminate the lease agreement if the tenant does not pay the rent, and such action can be taken after 15 days as of the day of a call for payment by the landlord.

The landlord may also cancel the lease agreement if the leased object is subleased without its permission when this is required by law or by agreement.

If the necessary repairs to the leased item impede its use to a significant extent and for a longer period, the tenant may terminate the agreement.

If at the time of handing over the leased object there is a defect that cannot be removed, the tenant may terminate the agreement (or request a rent reduction). 

When, due to alienation of a leased premises, the rights and obligations of the landlord will be transferred to the acquirer, the tenant can cancel the agreement in any case, respecting the legal, i.e. contractual termination periods (and in absence of contractual termination period, the usual ones).

In cases when the lease has expired and the tenant continues to use the premises with no objection from the landlord, it is considered that new agreement on indefinite period has been concluded.

There is neither a right of renewal nor an eviction indemnity payable by the landlord unless otherwise agreed in the lease agreement.

The revision of the rent is prescribed in cases when the necessary repairs of the leased premises hinder its use to a significant extent and for a longer period. In such cases, the tenant has the right to reduce the rent in proportion to the restriction of the use of the object due to such repair.

The landlord is obliged to maintain the object in proper condition during the duration of the lease as well as to carry out the necessary repairs. The landlord is also obliged to compensate the tenant for the expenses that the tenant incurred for the maintenance of the object. The costs of minor repairs caused by the regular use of the object, as well as the costs during the use itself, should be borne by the tenant. The tenant is obliged to notify the landlord of the need for repair.

The Tenant is obliged to use the leased object in a good manager, i.e. a good host. The tenant can only use the leased object as determined by the agreement or by the purpose of the object. He is responsible for the damage caused by the use of the leased object contrary to the agreement or its purpose, regardless of whether the object was used by him or by a person working on his behalf, the sub-lessee or any other person whom he enabled to uses the object.

The tenant is obliged to keep the leased object and return it undamaged after the termination of the lease. The lessee is not responsible for the wear and tear of the leased object that occurs with its regular use, as well as for the damages that originate from its wear and tear. If during the lease the tenant made any changes to the leased object, he is obliged to return it to the condition it was in when it was leased to him, unless the changes were made with the consent of the landlord. He can take away the additions that he made to the object if they can be separated without damaging leased object, but the landlord can keep them if the tenant compensates him for their value.

Unless otherwise agreed, the tenant may lease the leased object to other entity (sublessor/subtenant) or hand it over for use on some other basis, however, only if this does not cause damage to the landlord. The tenant guarantees to the landlord that the sublessor will use the object according to the lease agreement. 

In case of transfer of ownership of a leased premises, the new owner substitutes the landlord, and the rights and obligations of the lease continue to be valid between the new owner and the tenant. The new owner cannot ask the tenant to hand over the leased premises before the expiration of the period for which the lease has been agreed, and if the duration of the lease is not determined either by contract or by law, that is before the expiration of the notice period. The previous owner is responsible for the obligations of the new owner towards the tenant as a joint guarantor.

The tenant has no pre-emption right in the case of the sale of the premises unless otherwise agreed in the lease agreement.

There are no mandatory provisions regarding the form and/or duration of a rental guarantee in North Macedonia. Usually, in practice the landlord requires security for the payment of rent. Such amount varies between one-six months’ rent.

The landlord is obliged to maintain the object in proper condition during the duration of the lease and for that purpose to carry out necessary repairs. The landlord is also obliged to compensate the tenant for the expenses that the tenant incurred for the maintenance of the object, which the landlord was obliged to incur. The costs of minor repairs caused by the regular use of the object, as well as the costs during the use itself, should be borne by the tenant. The tenant is obliged to notify the landlord of the need for repair.

The rent is subject to 18% VAT provided that the landlord is a registered VAT-paying company.

If the tenant is legal entity and the landlord is individual, the tenant as legal entity has right and is obliged to calculate and pay the Personal Income Tax for the landlord, in amount of 15% of the agreed rent.

The lease agreements are concluded in written form and the parties are certifying their signatures by a notary public. The concluded agreement may be filed in the Agency of Cadaster and noticed in the Property Deed of the premises.