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ACQUISITION PROCESS:
KEY STAGES
• The real estate market in the Republic of Lithuania is
regulated following generally accepted principles of
ownership immunity, protection of rights of a bona fide
acquirer, equality of the parties and publicity.
• The land may be sold to foreign investors that meet the
criteria of European and Trans-Atlantic integration
1
. From
1st May 2014, foreign investors may acquire agricultural
land if they not less than 3 years in the last 10 years to
agricultural land purchase transaction date have carried out
agricultural activities and declared agricultural land and/or
crops. Acquisition of the agricultural land by legal entities is
also associated with agricultural production – a legal person
or other organization in addition is required to get more
than 50% annual revenue from agricultural production and
realization can prove the economic viability.
• Foreign investors have equal rights with Lithuanian
counterparts to acquire structures in the Republic of
Lithuania.
• The acquisition of real property must be, executing an asset
deal, at all times concluded pursuant to the rules of Civil
Code; certified by a notary public and post-signing registered
with Real Estate Register.
Negotiations
• The non-disclosure agreement is proposed by the one of
the parties in order to protect information on the further
transaction and to allow access to the property, information
and documentation.
• The potential purchaser issues a letter of intent or the
parties agree on heads of terms which usually are indicative,
though may contain binding provisions on non-disclosure or
exclusivity period.
• The due diligence usually is carried out within the exclusivity
period prior signing a preliminary or main agreement.
Preliminary agreements
• The parties may choose to not to conclude a preliminary
agreement and sign main agreement with (or without)
postponement condition; however it is less common and more
difficult to follow through.
• Preliminary agreement is an agreement between the parties
to conclude a main agreement in the future if all conditions
preceding are fulfilled.
• Preliminary agreements are necessary to contain:
(i) arrangement of the parties to conclude main agreement
in the future; (ii) provisions specifying the property and
conditions preceding; (iii) term or condition to conclude main
agreement.
• Preliminary agreement must be concluded in written form.
• Preliminary agreement is binding the parties and the liability
for the breach of pre-contractual obligations is set by the
Civil Code.
Main agreement and transfer-acceptance
• Upon fulfilment of all conditions precedent the parties sign
the main agreement.
• Notwithstanding the preliminary agreement, parties may
mutually agree on different provisions in the main agreement
than those specified in the preliminary agreement.
• Main agreement must contain provisions: (i) specification of
the real property (address, unique number, etc.); (ii) purchase
price; (iii) scope of rights passed to the buyer.
• Whilst acquiring structures, if there is, the certificate of
energy efficiency should be presented to the buyer.
• All real property agreements on title transfer must by certified
by notary public and registered with Real Estate Register.
• The passing of the title is executed by signing transfer-
acceptance deed. The title of property may be passed with
the main agreement if parties explicitly agree on it in the
main agreement; however the common practice is to sign
the transfer-acceptance deed as a separate document after
partial or full payment of the price.
• Civil Code grants a seller’s warranty for defects that could
have not been reasonably seen during the inspection of the
property.
COMMERCIAL LEASES
• Civil Code does not provide specific regulation on commercial
leases; the general rules of lease are applied.
• The law sets these requirements for the lease agreement:
(i) leased property and its purpose of use must be specified
(ii) lease term must be specified and shall not be longer than
100 years (if the term is not specified, the lease agreement
will be viewed as concluded for indefinite term) (iii) lease
agreement must be in written form if lease term is longer than
1 year.
Validity and termination of lease
• Lease agreements may be concluded for a fixed or indefinite
term.
• The fix-term leases are more common whereas pursuant to
the Civil Code the indefinite term lease agreement may be
terminated at any time after submitting the other party with
a warning 3 months prior the termination date (the lease
agreement may provide longer terms of warning).
• The lease term starts upon concluding a transfer-acceptance
deed of the leased property and continues throughout
the validity of lease agreement, unless the parties agree
otherwise.
• The lease term is automatically prolonged if within the lease
term the tenant cannot use the leased property due to capital
construction works of property.
• If 10 days after the termination date of the lease agreement
the tenant continues to use the leased property and the
landlord does not pursue to evict the tenant the lease
agreement transforms to indefinite.
• If throughout the lease term the lease agreement was not
breached by the tenant, the tenant preserve “first hand” right
to continue to lease the property.
1
Foreign legal persons and other foreign organisations that have been set up in one of these states: (i) the European Union member states; (ii) states parties to the Europe
(Association) Agreement concluded with the European Communities and their member states; (iii) Member states of the Organisation for Economic Co-operation and
Development (OECD), North Atlantic Treaty Organisation (NATO) and states parties to the European Economic Area Agreement. Foreign nationals (natural persons) of the
states specified above and permanent residents of the said foreign states, as well as permanent residents of the Republic of Lithuania who are not citizens of the Republic of
Lithuania.
68 Investors Guide to Europe 2015