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Lease agreement: how should the lessee company act in the event of the lessor's death?

In today's conditions, the question of the future fate of the concluded lease agreement in the event of the death of the owner of the property - the lessor - arises more and more often. Issues such as whether the lessor's death is an automatic reason for terminating such a contract and whether the lessee remains obligated to pay the rent are problematic.

In this article, we will discuss in more detail how to act as a tenant enterprise in such a case.

  1. The death of the lessor is not an automatic reason for terminating the contract

As a general rule, all the rights and obligations of the deceased that belonged to the latter at the time of the opening of the inheritance and did not cease as a result of his death pass to the heirs (Article 1218 of the Civil Code of Ukraine).

That is, unless the lease agreement provides otherwise, all rights and obligations of the lessor after his death pass to the heirs. Accordingly, the contract is automatically extended.

However, there are always exceptions to the general rule.

According to Part 4 of Article 31 of the Law of Ukraine "On Land Leasing", unilateral termination of the land lease agreement is not allowed, unless otherwise stipulated by this contract.

The transfer of ownership to another person in the order of inheritance is not a basis for changing the terms or terminating the contract, unless otherwise provided by the contract itself (Part 4 of Article 32 of the Law).

From the above, it can be seen that the parties can independently determine the grounds for terminating the contract, in particular, establish as one of the grounds - the death of the lessor and the transfer of ownership to another person. In this case, the rental agreement will be automatically terminated.

We note! Often in lease agreements, the parties indicate the possibility of changing the terms of the agreement if the ownership is transferred to another person. Such a clause in the contract avoids the automatic termination of the contract, because the parties by mutual agreement can either change its essential conditions or decide to terminate it. If it is not possible to agree on all issues, it is possible to terminate the contract in court.  

Thus, the death of the lessor can be an automatic reason for terminating the lease agreement only if it is expressly provided for by the parties in such an agreement. In other circumstances, the contract does not lose its validity.


  1. Can the company extend the validity of the lease agreement if its validity period has expired on or after the death of the lessor, and there is no clause on the automatic renewal of the agreement?

Yes, it can. In such a case, the enterprise independently renews the term of the contract on the same terms and for the same term by submitting an application to the State Register of Real Property Rights. The application is submitted within one month from the day when it became known about the death of the lessor.   

We pay attention! Renewal of the agreement is valid only until the moment of state registration of the right of ownership by the heirs. The state registration of the termination of the right to rent under the contract is carried out simultaneously with the state registration of the ownership right.

  1. Paying rent - worth it or not?

Since, as a general rule, after the death of the owner of the property, the lease agreement is not automatically terminated, accordingly, the tenant's obligation to pay rent remains.

However, the question arises, what are the possible rental payment options for the business to avoid potential disputes with the new owners of the rental property regarding late payment of rent?

There are three options for the payment of lease payments in the event of the death of the lessor:

  • the company can charge rent, and actually pay the heir already after accepting the inheritance.

Until the heir is determined, the tenant can charge rent and pay personal income tax, military tax according to general rules, but not show these charges and payments on the 4DF form, since there is actually no person for whose benefit such a charge is made.

At the same time, in Appendix 4DF, the tenant must display the accrual and payment of rent payments for the period when the rent will actually be paid to the heir, according to the TIN (individual tax number) of the heir.

  • the company can deposit the amount of rent in the notary's deposit for its further transfer to the heirs of the deceased

In the context of judicial practice, depositing rent in the notary's deposit is not an obligation, but a right of the enterprise - the tenant. Therefore, failure to deposit the rent in the notary's deposit cannot be an unconditional basis for terminating the lease agreement. Such "inactivity" of the enterprise entails only the obligation to pay the rent accrued for the corresponding period of use of the leased property.

  • the company can pay the entire amount of accrued rent (for the entire period of non-payment) after receiving a statement from the new owner of the property

It is the heirs, as new lessors, who are responsible for informing the lessee about the transfer of ownership, indicating all the necessary data and details. The term of such notification is 1 month from the date of state registration of the right of ownership by the heir.

Thus, the heirs are obliged to inform, in particular, about:

  • name of the legal entity, full name of the new owner;
  • place of residence (location) and postal address;
  • cadastral number, location and area of the land plot;

- new payment details.

Thus, if the heirs do not report themselves, and the company does not have an objective ability to pay in a timely manner, such circumstances cannot be grounds for terminating the lease agreement, since the actions of the new lessors testify to dishonest behavior.

  1. What about concluding an additional agreement with the new owners of the leased property?

The enterprise can enter into an additional agreement to such an agreement or sign a new agreement with the heirs only after the state registration of the right of ownership for them.

The above is explained, in particular, by the fact that when the tenant is notified of the transfer of ownership of the leased property, the heirs - the new landlords - must provide the tenant with copies of the following documents:

  • a certificate of inheritance,
  • a state act or an extract from the State Land Cadastre (if the company leased a plot of land).

Thus, all issues related to the renewal of lease agreements / the conclusion of additional agreements to them are resolved exclusively after the transfer of ownership of the leased property to new owners.

As you can see, the death of the lessor as one of the potential grounds for terminating the lease contains many pitfalls. In order to properly protect the rights of the company as a lessee and to avoid potential conflicts with the lessor's heirs in the future, first of all, it is necessary to analyze all the terms of the contract in detail.

Therefore, if you have any questions in this regard, please contact our law firm for a thorough consultation.




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