Concept of Rent
Rent – under a rent agreement, one party – the rent payer (debtor) undertakes to periodically pay a specified sum of money (the rent) to the other party – the rent recipient, either free of charge or in exchange for the transfer of capital into their ownership, or to otherwise provide maintenance to the recipient.
Types of rent agreements in force in the Republic of Lithuania:
- indefinite rent;
- lifetime rent;
- lifetime maintenance.
The obligation to pay rent may arise from a contract, law, court decision, or a will. Under a rent agreement, the rent recipient may undertake to transfer ownership of movable or immovable property or a certain sum of money to the rent payer.
The agreement may specify that the rent is to be paid for the lifetime of the recipient, indefinitely, or for a fixed term. Lifetime rent may also be structured as lifetime maintenance. The contract may also specify that, after the death of the recipient, the rent is to be paid to their heir or another designated person. The duration of a rent agreement may not exceed 100 years from the date of its conclusion.
In Lithuania, a rent agreement must be in notarial form. A rent agreement whereby the recipient transfers immovable property to the rent payer is enforceable against third parties only if it is registered in the public register in accordance with legal requirements.
If the rent payer transfers the property, the obligation to pay the rent passes to the acquirer of that property. In other words, the rent acquires a “tracking” character — the obligation to provide maintenance follows the object and falls upon the new owner. The former owner remains a subsidiary (secondary) debtor.
The main goal of a rent agreement in the Republic of Lithuania is to satisfy the rent recipient’s maintenance-related needs (most often elderly, ill, or partially incapacitated persons). Once the property is transferred, the recipient has no further obligations — only the right to receive maintenance from the rent payer. Clearly, the rent recipient is the weaker party in this legal relationship, which is why their interests must be thoroughly protected. All regulation of rent agreements in Lithuania is structured with a focus on safeguarding the recipient’s rights.
The Lithuanian Civil Code provides the following protective measures for the rent recipient:
- If the rent payer fundamentally breaches the agreement, the rent recipient has the right to demand its termination and to request either the return of the transferred immovable property or the payment of its redemption value;
- It is considered that immovable property transferred to the rent payer is encumbered with rent. This means that regardless of future ownership, the new owner will be obligated to continue the rent payments;
- It is prohibited to seize or direct enforcement against funds necessary for the maintenance of the rent recipient;
- The risk of accidental damage to the transferred property lies with the rent payer. Even in such cases, the payer is not released from the obligation to provide maintenance.