PORTUGAL LAW AND PRACTICE Contributed by: João Gonçalo Galvão, Carolina Cardoso Alves and Miguel Paquete, CS’Associados
Real estate taxes paid by the landlord include Municipal Property Tax (IMI) and Additional Municipal Property Tax (AIMI) – see 8.3 Munici- pal Taxes . 6.12 Insurance Issues The landlord typically bears the cost of property insurance, such as multi-risk insurance cover - ing property destruction and damage, including due to fire, floods, weather events, earthquakes and vandalism. In triple-net leases it is, however, common that the cost of insurance policies is allocated to tenants. Tenants are responsible for purchasing and maintaining all insurance legally required for the performance of their activity in the premises. Lease agreements may also stipulate that the tenants are required to enter into specific civil liability insurance covering operational risks and potential damages caused to third parties, as well as to their belongings and equipment. 6.13 Restrictions on the Use of Real Estate Use of real estate by tenants is subject to restric - tions arising from mandatory law (such as gen - eral notice laws, zoning regulations, etc), as well as from the terms of the respective leases. The main limitation concerns the prohibition of the tenant from using the property for any pur - pose other than the one for which it is specifi - cally licensed. Standard restrictions imposed by landlords con - cern: • prohibition from subleasing the premises without prior consent; • prohibition from performing any structural changes to the property;
• forbidding the pursuit of unlawful or unli - censed activities; • the need to comply with certain structural limitations of the property; and • no storage of inflammable/dangerous sub - stances. Further restrictions may also be imposed by condominium regulations or short-term rental regulations. 6.14 Tenant’s Ability to Alter and Improve Real Estate Generally, tenants are entitled to alter and improve real estate, such improvements revert - ing to the benefit of the landlord at the end of the lease, it usually being agreed that the tenant is not entitled to any compensation therefor. Apart the initial fit-out/adaptation works that are usually authorised in the lease agreement, execution by the tenant of other works is subject to the landlord’s prior consent. Pursuant to law, the requirement for landlord’s consent may be dismissed if the relevant works are deemed necessary and urgent or if the land - lord fails to the execute repair or improvement works required by the municipality. In the lat - ter cases, the tenant may be reimbursed for the costs incurred. Conditions or requirements imposed by land - lords usually concern: • the need for the works to be licensed and compliant with applicable legal and regulatory provisions; • the need for the works to be executed by specialised professionals, following pre- approved plans;
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