Legal Framework and Issues in Real Estate Leases

07 Feb Legal Framework and Issues in Real Estate Leases

Real estate leases are among the most common contractual relationships, playing a crucial role in both residential and business activities. The applicable legal framework, shaped by the Greek Civil Code and specific laws, aims to regulate the rights and obligations of landlords and tenants, ensuring the fair and smooth development of lease agreements. This framework includes different types of leases, the key obligations of the involved parties, and the common legal issues that arise during their execution.

Types of Leases

Leases are primarily categorized into two main types:

• Residential Leases: These involve the use of properties for housing purposes and are governed by the provisions of the Greek Civil Code (Articles 574–618) as well as specific laws such as Law 1703/1987 and Law 2235/1994, which establish special provisions for tenant protection.
• Commercial Leases: These pertain to the use of properties for business purposes. Law 4242/2014 introduced significant modifications to the duration and terms of such leases, providing greater flexibility for the contracting parties.

Key Rights and Obligations of the Parties

Landlord’s Obligations

The landlord is required to:

• Deliver the leased property in a condition suitable for the agreed-upon use, ensuring that there are no damages beyond normal wear and that all terms of the lease agreement are met.
• Maintain the property in good condition and carry out necessary repairs.
• Ensure the tenants uninterrupted and undisturbed use of the property, protecting them from any third-party interference or unlawful intrusion.

Tenant’s Obligations

The tenant must:

• Pay the rent on time according to the agreed terms, considering any provisions for rent adjustment or payment deadlines. The tenant is also responsible for covering shared expenses as specified in the lease agreement and the building regulations, provided these relate to the use of the property and common facilities.
• Use the property in accordance with the agreed purpose, complying with the lease terms and relevant legal provisions. The tenant must exercise proper care in using the property, avoiding actions that could damage it or reduce its value. If damages beyond normal wear occur, the tenant must repair them or compensate the landlord as stipulated in the lease agreement.
• Return the property in the condition in which it was received, considering normal wear due to use, at the end of the lease. If there are damages beyond normal wear, the tenant is responsible for repairing them or compensating the landlord.

Lease Duration and Termination

For residential leases, the minimum mandatory lease duration is three years, even if a shorter period is stated in the contract. If the tenant remains after the contractual period and the landlord does not object, the lease may be considered implicitly renewed unless there is an explicit contractual clause preventing this. According to Article 2 of Law 1703/1987, as amended by Article 1(5) of Law 2235/1994,
the minimum duration for a primary residence lease is three years. However, this period may be shortened by mutual agreement, which must be documented in a notarized contract at least six months after the lease commencement. For commercial leases, since 2014, the previous mandatory 12-year duration was abolished, granting greater freedom for negotiation between the parties. According to Article 618 of the Greek Civil Code, if a property lease exceeds nine years, it is enforceable against third parties only if executed through a notarized deed and registered with the relevant land registry or cadastre office. This registration ensures that the lease remains binding on all parties, including any future owner of the property in case of sale or transfer. Compliance with these formalities is crucial for protecting the tenant’s rights and ensuring the lease remains valid under the agreed terms, regardless of property ownership changes.

Legal Issues and Dispute Resolution

Some of the most common legal issues in real estate leases include:

• Delayed Rent Payments

If the tenant fails to pay rent on time, the landlord has the right to terminate the lease and seek eviction. The landlord can also claim compensation for overdue rent and request default interest. The process can be expedited through a rent payment and eviction order, a fast-track judicial procedure. This allows the landlord to swiftly reclaim the property and recover unpaid amounts, provided the legal requirements are met, and the necessary documents (such as the lease agreement and proof of unpaid rent) are submitted.

• Property Damages
  If the tenant causes damages beyond normal wear, the landlord is entitled to demand repairs or compensation. In cases where damage affects the property's usability or value, the landlord may terminate the lease and take legal action to recover losses.
• Early Lease Termination
  If the landlord arbitrarily terminates the lease, the tenant may claim compensation for the loss of use. Similarly, if the tenant vacates the property before the lease term ends, the landlord can seek compensation for lost rent and other financial damages resulting from the premature termination of the contract.
• Rent Adjustment
  Rent adjustment provisions primarily concern commercial leases and must be reasonable and in line with economic conditions. Legal disputes often arise over unfair rent increases or the refusal of landlords to renegotiate rental terms under market fluctuations.

Ensuring Compliance and Preventing Legal Disputes

The legal framework governing real estate leases seeks to maintain a balance between landlords’ and tenants’ rights and obligations. Adhering to contractual and legal responsibilities is vital for preventing disputes and ensuring a harmonious leasing relationship. In case of disagreements, litigation is an option, but mediation and amicable settlement often provide faster, more cost-effective, and efficient solutions, avoiding unnecessary legal conflicts.

Legal Support for Real Estate Lease Issues

Our law firm has extensive experience in handling legal matters related to real estate leases, offering comprehensive solutions for both landlords and tenants. From mediation to court representation, we responsibly and professionally defend our clients interests, ensuring fair and sustainable solutions in every lease-related dispute.

If you need legal assistance with a lease agreement or dispute, contact us for expert legal advice tailored to your case.