CROATIA Law and Practice Contributed by: Marko Paulinović and Dino Vukoša, Buterin & Partneri
(obligational) arrangements as well as through the establishment of certain property rights. The most common contracts are rental and lease agreements, under which real estate is granted for use or occupation for a definite or indefinite period, for a consideration. Real estate leasing arrangements are also used, although to a limited extent. Regarding property rights, the Ownership and Other Proprietary Rights Act provides for personal ease - ments, although these are used almost exclusively between natural persons. In practice, proprietary arrangements allow significantly less flexibility than contractual arrangements and therefore are less fre - quently utilised in commercial transactions. 6.2 Types of Commercial Leases The main legislation governing the lease of com - mercial premises is the Commercial Premises Lease and Sale Act, with the Civil Obligations Act applying subsidiarily as the general substantive law governing contractual relationships. The primary distinction between lease agreements is between those concluded for a fixed term and those concluded for an indefinite term. A fixed-term lease terminates upon the expiry of the agreed period, whereas an indefinite-term lease may be terminated by notice, subject to the statutory or contractually agreed notice period. Although the Commercial Premises Lease and Sale Act regulates the main rights and obligations of the contracting parties, the parties remain free, within the limits of the law, to regulate their contractual relation - ship in accordance with their mutual agreement. Where the lessor is the Republic of Croatia or a local self-government unit, the lease agreement is generally concluded through a public tender procedure, subject to strict compliance with statutory requirements. 6.3 Regulation of Rents or Lease Terms As a general rule, the amount of rent and the duration of a commercial lease are freely negotiable between the parties, subject to certain elements of the lease relationships regulated by law. Furthermore, business
premises owned by the Republic of Croatia or by local or regional self-government units are leased through a public tender procedure, which limits the possibil - ity of entirely unrestricted contractual negotiation of lease terms. Residential rent agreements are, however, subject to stricter regulation under the Apartment Rent Act. This legislation prescribes the mandatory content of residential rent agreements and regulates the rights and obligations of the contracting parties, who may only agree upon contractual terms that are not already regulated by statute. The Apartment Rent Act distinguishes between rent agreements with freely agreed rent and those with protected rent amounts provided for specific catego - ries of tenants. 6.4 Typical Terms of a Lease The lease term is most commonly agreed for a fixed period, for example five or ten years, particularly in the context of long-term commercial investments, whereas leases concluded for an indefinite period are less common in commercial practice. With regard to maintenance and repairs, the lessor is obliged to deliver the premises in a condition suit - able for the agreed use and to maintain such condi - tion throughout the duration of the lease, while the lessee bears the costs of regular maintenance and minor repairs resulting from ordinary use, unless oth - erwise agreed. Rent is typically paid on a monthly basis, either in advance or by a specified date during the month, although the parties may agree on different payment terms. 6.5 Rent Variation Adjustment of rent during the term of the lease depends primarily on the contractual provisions agreed between the parties. The parties may agree on a fixed rent that remains unchanged until the expiry of the lease term; how - ever, in practice it is common for lease agreements to include a rent adjustment clause, for example linking
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