LATVIA Law and Practice Contributed by: Jānis Kārkliņš, Annija Kārkliņa, Ēriks Krēsliņš and Rihards Strads, BERG
where the improvement is “necessary”, in which case the tenant must be compensated. However, in the case of “useful” improvements, the landlord is obliged to compensate the tenant only to the extent that they increase the value of the property and provided they were made in good faith, whereas the costs of “luxu - ry” improvements are reimbursed solely if they were undertaken at the landlord’s request. The lease agreement typically lays down the con - ditions governing the performance of such works, including (for instance) the time periods during which the works may be performed, the type and quality of materials to be used, etc. 6.15 Specific Regulations Specific regulations apply to residential leases, as set out in the Residential Tenancy Law. These rules are largely aimed at protecting the tenant as the weaker party to the contract. The main rules include the following: • the contract must be in writing; • the lease must be concluded for a fixed term; • the security deposit is subject to a statutory cap; • there are specific rules governing who may reside in the premises; and • the landlord’s rights of termination are specifically limited by law. The mentioned law also sets out specific obligations for each party. 6.16 Effect of the Tenant’s Insolvency As a general rule, where a tenant becomes insolvent, and an auction of their property is announced, the par - ties are entitled to unilaterally withdraw from the lease agreement. In order to safeguard the interests of the insolvent tenant, this right to withdraw is exercised by the insolvency administrator. In such circumstances, the landlord is entitled to submit a creditor’s claim in the insolvency proceedings. 6.17 Right to Occupy After Termination or Expiry of a Lease As a general rule, upon the expiry of the lease agree - ment, the tenant no longer has any right to remain
in possession of the leased property and is therefore under an obligation to vacate the premises without delay. For additional information regarding the actions available to a landlord if the tenant does not vacate the premises voluntarily, see 6.21 Forced Eviction . As the law does not specifically regulate the meas - ures a landlord may take to ensure that the tenant vacates the premises in a timely manner, such mat - ters are typically governed by the lease agreement. In practice, the parties often include provisions stipulat - ing, for example, that any property not removed by the agreed deadline may be deemed to become the property of the landlord. Under the Residential Tenancy Law, if the tenant fails to vacate the residential space, the tenant shall com - pensate the lessor or the acquirer for any losses and also pay compensation for the use of the residential space. 6.18 Right to Assign a Leasehold Interest Subletting of the leased property is permissible only with the prior consent of the landlord. In such cases, the tenant must observe the principles of good faith, refrain from using the property for purposes other than those agreed upon, and ensure that the duration of the sublease does not exceed the term of the tenant’s own lease. The establishment of a sublease does not transfer the tenant’s rights and obligations under the original lease to the subtenant; instead, the original lease and the sublease exist as separate and independent legal rela - tionships. However, the subtenant is entitled to satisfy the tenant’s obligations by making payments directly to the original landlord, up to the amount of the ten - ant’s outstanding debt. 6.19 Right to Terminate a Lease Either party is entitled to terminate the contract in cas - es of excessive loss, provided that the other party’s bad faith is established. In addition, the landlord may request the termination of the contract where:
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