9.4. Lease Agreement: Is There a Need for Reform?

Track: 9. Private Law

Description

The reform of the general part of the liability law is over. Is it time to start reforming its special part? Let us review this through the example a classic contract type: a lease agreement. Are researchers and practitioners comfortable with the way the Civil Code regulates this type of contract?

Discussion topics:

  1. Subject matter of a lease agreement: should not the Code additionally indicate the lessor’s responsibility to ensure the leaseholder a comfortable tenancy and use?
  2. Sharing of the risk of accidental destruction of the leased property. How indefinitely can such risk be applied to the lessor by mutual agreement of the parties? Is Article 211 of the Russian Civil Code sufficient for this: “the risk of an accidental destruction of the property or of an accidental damage inflicted on it shall be borne by its owner, unless otherwise stipulated by the law or by the contract”? What is included in this risk?
  3. Scope of a lease: can a part of an item be leased? Or the item will be leased in its entirety? In the latter case, what will be the correlation of the rights of different leaseholders who lease different parts of the item?
  4. Should the Civil Code retain the provision that the lessor must be the owner? Does the lease obligation arise in case of the lease from a non-owner? In this case, can the true item owner make a claim to the dishonest leaseholder, for instance, with regard to the collection of the lease as an unjustified enrichment (saved direct lease costs)? Can such unjustified enrichment exceed the amount of lease set out in the agreement between the leaseholder and non-owner? If the court decides that the leaseholder must pay the owner, will the leaseholder always have the right to demand the lessor to return the sums paid, and on what grounds? Who is hiding behind the name of the dishonest leaseholder: only the person who truly knows that the lesser does not have the title, or also the person who must know it? At what point in time is it justified to check the leaseholder’s honesty? Can it happen later on?
  5. Registration of a real estate lease contract concluded for more than one year: should it be kept and what are the consequences if such registration is missing? Case practice development: from loss of contract to opposability. Do public authorities have the right to note the lack of agreement registration while discharging their public functions (issue of licenses, tax base identification, etc.)?
  6. Strict written form of the building lease agreement (nullity of the agreement as a sanction) – is it required?
  7. Practicability of the new version of Article 614 of the Civil Code governing the lease change. Parties must be free to change the lease by consent for an unlimited number of times per year, while unilateral rent change at the lessor’s initiative must be restricted. What basis needs to be rectified in the law: annual or some other?
  8. Return of the leased item by the leaseholder. What to do if the item is returned not in the condition wherein the leaseholder was supposed to return it? Does the lessor have the right to refuse accepting such item and charge the lease for the duration of time while the leaseholder is repairing it? Or must the lessor accept the item, but collect the losses from the leaseholder in the form of repair cost and profit lost due to the item’s inoperability?
  9. Lessor’s response actions in case the leaseholder misses the lease payment date. Is it acceptable to cut off power supply or restrict the input power? Which leaseholder categories justifiably need to be protected from eviction if they have temporary problems with lease payment? What contract withdrawal restrictions can be imposed, for instance, in case of land lease for agricultural production?
  10. Keeping the lease if the leased item is being sold. What are the possible restrictions to this rule? For instance, maybe this rule should not apply in case of the leased item’s forfeiture because of the owner’s debts? Otherwise how do we deal with the fact that the item can be leased on very disadvantageous terms, and probably that has been done deliberately to harm the creditors?
  11. 11. Lease for the development purposes. Can the same goals that are achieved abroad through property development law be achieved by adding property elements into the leasehold as a liability law institution? And should it be done?

Moderator:

Andrey Egorov

First Deputy Chairman of the Board, Alexeev Private Law Research Centre under the President of the Russian Federation

Speakers:

Markus Artz

Head of the Department of Civil Law, European Private Law, Commercial and Business Law, Comparative Law, University of Bielefeld

Roman Bevzenko

Professor, Alexeev Private Law Research Centre under the President of the Russian Federation

Olivier Echappé

Judge, Member of the Third Civil Chamber, Supreme Court of France

Jean-Christophe Gracia

Deputy Director for Civil Affairs and Press, Ministry of Justice of France

Oksana Kozyr

Head of Real Rights Department, Alexeev Private Law Research Centre under the President of the Russian Federation

Mikhail Tserkovnikov

Associate Professor, Alexeev Private Law Research Centre under the President of the Russian Federation

Bernhard Von Grünberg

Member of the Landtag, Chairman, German Tenants´Association of Bonn, Rhein-Sieg, Ahr


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