Lease in Lithuania

Definition of a Lease Agreement

A lease is the granting of the right to use a created object, the object of neighboring rights, or its original or duplicate for a certain period to achieve a direct or indirect purpose. Under a lease agreement, one party – the lessor – undertakes to temporarily transfer property to the lessee for possession and use for a fee, while the other party – the lessee – undertakes to pay the rental fee.

A lessee is a natural person who concludes the lease agreement in their own name and for their own interest or for the interests of their family or former family members.

The lessor is the owner of residential premises or a person holding them under another legal basis. A lessor may also be the holder of other property.

The lease agreement in the Republic of Lithuania is of a remunerative nature. The lessee must pay rent on time. A lease agreement must be made in writing if concluded for more than one year. When real estate is leased for a period longer than one year, it is recommended to register the contract in the appropriate registry in Lithuania so it can be enforced against third parties. Leases of buildings, structures, or equipment are considered real estate leases.

A lease agreement may be fixed-term or open-ended, but cannot exceed 100 years. If, after the lease expires, the lessee continues using the property for more than ten days and the lessor does not object, the lease is considered indefinite. If no term is specified, the lease is presumed to be open-ended. Whether the lease is for a fixed term or not, and its duration, is determined by mutual agreement.

Any non-consumable item can be leased unless otherwise provided by law. The law may also specify certain types of items that cannot be leased or may limit their leasing. The lease agreement must specify the item or its characteristics to be leased. If neither the object nor its characteristics are specified, and it cannot be determined otherwise, the agreement is considered invalid.

If the lessee has duly fulfilled the obligations under the lease, they have a preferential right to renew the lease and continue using the property.

Income, fruits, or offspring from leased property belong to the lessee unless otherwise agreed. The lessee must use the property according to the contract and its intended purpose, and not interfere with other legal users. The lessor, without violating the rights of the lessee, has the right to check whether the property is being properly used.

Once the lease agreement is concluded, the question arises whether the lessee may sublease the property. The lessee may only sublease with the written consent of the lessor unless otherwise agreed. The sublease period may not exceed the lease term. The lessor’s refusal to permit subleasing must be reasonably justified. If not, the lessee may terminate the agreement early.

The lessee must properly maintain and operate the leased property and cover maintenance expenses. The lessee must also perform current repairs at their own expense unless otherwise provided. The lessee must pay rent on time. If conditions for use or the condition of the property significantly deteriorate due to reasons beyond the lessee’s control, the lessee has the right to request a rent reduction.

A fixed-term lease ends when the agreed period expires, unless the parties renew it by concluding a new agreement.

The lessor has the right to request in court that the lease agreement be terminated early if:

1. the lessee uses the property contrary to the contract or its intended purpose;
2. the lessee worsens the condition of the item intentionally or due to negligence;
3. the lessee fails to pay rent;
4. the lessee fails to carry out repairs which they are obligated to perform under the law or the agreement;
5. there are other grounds specified in the lease agreement.

The lessor in the Republic of Lithuania may demand early termination of a fixed-term lease agreement only after sending a written warning to the lessee indicating the need to fulfill obligations or remedy violations within a reasonable time, and if the lessee, after receiving the notice, fails to comply or remedy the violation within the specified period.

The lessee has the right to request early termination of the lease agreement in court if:

1. the lessor fails to perform repairs they are obligated to carry out;
2. the item becomes unusable due to circumstances beyond the lessee’s control;
3. the lessor fails to deliver the item to the lessee or obstructs its use according to its purpose and contract terms;
4. the item has defects not disclosed by the lessor and unknown to the lessee, which make it unsuitable for use according to its intended purpose and the contract terms;
5. there are other grounds specified in the lease agreement.

Upon expiration of the lease, the lessee must return the item to the lessor in the condition in which it was received, accounting for normal wear and tear, or in the condition agreed upon in the contract. If the lessee has worsened the condition of the leased item, they must compensate the lessor for any damage, unless they can prove that the damage was not their fault. If, with the lessor’s permission, the lessee improves the leased item, they are entitled to reimbursement of necessary expenses, unless otherwise provided by law or the lease agreement in the Republic of Lithuania. Improvements made without the lessor’s permission may be removed by the lessee, if they can be separated without damaging the leased item and the lessor refuses to compensate their value.