Rent Agreements

A lease agreement does not transfer ownership however it grants the lessee the right to make use of the property subject to the terms and conditions of the lease agreement entered into between the parties to it. In essence a lease agreement, which is also referred to as a contract of lease, is defined as a contract whereby one of the parties (the lessor) binds himself to give the other party (the lessee) the enjoyment of a specific thing for a specified duration and a specified rent which the lessee on his part binds himself to pay to the lessor.

In Malta, lease agreements entered into after 1995, are regulated by the Civil Code and the Private Residential Leases Act. The relative provisions of the law are intended to establish the main rights and obligations incumbent to the lessor and lessee.

Leases in Malta are split into two categories (a) Residential Leases (b) Commercial Leases. The law provides that all residential and commercial leases of a property entered into after the 1^st January 2010 must be in writing and must, stipulate the following:

• The property to be leased;
• The use to be made of that property as agreed between the parties;
• The duration for which the property will be let;
• Whether the lease may be extended and how;
• The rent to be paid and the way the payments shall be done.

Both residential and commercial lease agreements must stipulate the manner in which they will be terminated other than when the duration stipulated in the contract has expired. Usually lease agreements lay down that the lease will be terminated if either party fails to perform one or more of their obligations. For example, the law lays down that if the lessee fails to pay the rent punctually on two consecutive occasions, the lessor must file a judicial letter in the registry of the Court, which judicial letter must be served on the lessee. If after the lessee has been notified with this judicial letter, he still fails to pay within fifteen days of notification the lease agreement will be terminated.

With respect to private lease agreements the law lays down that any agreement entered into after the 1^st January 2010 must be in writing otherwise it shall be null and must stipulate the following:

• The property to be leased.
• The use agreed between the parties of the property let.
• The duration for which the property will be let.
• Whether the lease may be extended and how.
• The rent to be paid and the way the payments shall be done.
• Any sum paid in deposit by the lessee by way of guarantee for the performance of his obligations.
• An inventory as to the condition of the property as well as that of the furniture and domestic appliances provided by the lessor.

A commercial lease is a lease agreement on a property which is not to be used as a residence, but which is used for commercial purposes to generate a profit. Within this category one would find shops, clinics, and any other property from which one would practice his art or profession.

As with private residential leases a commercial lease agreement must be in writing and must stipulate the following:

• The property to be leased.
• The use agreed between the parties of the property let.
• The duration for which the property will be let.
• Whether the lease may be extended and how.
• The rent to be paid and the way the payments shall be done.

Although it is not a requirement laid down by law, we would advise that an inventory is drawn up such that the movables found in the property being leased and which form part of the lease agreement are listed clearly. It is also advisable to describe the state these movables are in order to reduce the possibility of future disagreements between the parties.