CZECH REPUBLIC Law and Practice Contributed by: Matěj Manderla, Jan Wagner, Ivo Hartmann and Aleš Malach, Tenacta, advokátní kancelář, s.r.o.
6.14 Tenant’s Ability to Alter and Improve Real Estate Tenants are generally permitted to alter or improve the leased real estate (carry out “fit-outs”), but under standard commercial lease agreements, any such works are strictly subject to the landlord’s prior writ - ten consent. Minor, non-structural aesthetic changes might sometimes be exempt. Landlords routinely impose strict, detailed conditions on approved works to protect the asset’s value and structural integrity. These typically include: • prior approval of detailed design and technical project documentation; • the tenant’s obligation to obtain all necessary pub - lic permits (eg, building permits); • mandatory use of certified contractors (landlords often require tenants to use the landlord’s pre - ferred or pre-approved contractors, particularly for mechanical, electrical and plumbing (MEP) works or structural interventions); and • adherence to the building’s specific technical guidelines and rules of operation during the con - struction phase. A market standard addresses the end of the lease term. The tenant is customarily obliged to remove all their alterations and reinstate the premises to their original handover condition at their own cost. The landlord usually reserves the right to elect that some or all of the improvements remain in the premises. If the landlord chooses to retain the improvements, market practice dictates that the tenant is not entitled to any financial compensation for the residual value of such works. 6.15 Specific Regulations Statutory Categories The Czech legal framework, primarily the Civil Code, does not have separate statutes for every single asset class. Instead, it creates a fundamental dichotomy between residential leases and commercial leases. Residential Leases The lease of apartments is strongly regulated by man - datory rules designed to protect tenants as the weaker party. These rules cannot be changed to the tenant’s
disadvantage. For example, the security deposit is capped (three months’ rent), termination rights are limited to specific statutory grounds and contractual penalties are strictly controlled. Commercial Leases Offices, retail units and industrial/logistics facilities generally fall under a general category of commercial leases. Here, the key principle is freedom of contract. Most legal provisions are optional, allowing landlords and tenants to negotiate the terms largely as they wish. A specific category includes hotels, agricultural land or entire operational businesses, which are often struc - tured not as a standard lease, but as a usufructuary lease. In this case, the tenant is entitled not only to use the property but also to operate it and take its profits. 6.16 Effect of the Tenant’s Insolvency Under Czech insolvency law, the commencement of insolvency proceedings does not affect the validity or duration of a lease; the lease continues as normal. Once a decision on insolvency has been issued, the impact depends on the method of resolution. In bank - ruptcy liquidation, the insolvency administrator may terminate the lease even if it was agreed for a fixed term, subject to the statutory or contractual notice period (whichever is shorter). In reorganisation, the lease generally continues without such termination right. 6.17 Right to Occupy After Termination or Expiry of a Lease No Right To Continue Occupation Upon expiry or termination, the tenant has no right to remain and must vacate and hand over the premises. Ensuring Timely Vacating To secure timely handover, leases commonly include holdover provisions imposing increased rent and ser - vice charges for each day of delay. The tenant is also typically liable for any damages incurred by the land - lord as a result of late vacating.
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