16 | Investor Guide to Europe 2014
aCQuISITIon PRoCESS:
KEY STaGES
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Preliminary contracts
•
Heads of Terms or Letter of Intent
- used prior to entering into the transfer document,
contain basic economic terms of the transfer document
and other corresponding matters (e.g., exclusivity, confi-
dentiality).
- usually not a legally binding document, but the party
could be held liable for damages caused on the grounds
of pre-contractual liability if the party won’t negotiate in
good faith.
•
Agreement on Future Agreement (pactum de contrahendo)
- one or both parties to the agreement obligated to enter
into an (future) agreement that is determined in at least
in a general way, in an agreed period (otherwise until 1
year) and without reasonable delay after receiving notifi-
cation of the other party.
- if the obligated party does not enter into a future agree-
ment, the conclusion of the agreement might be claimed
by a court.
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Transfer of real estate
asset deal
•
The owner of the real estate and the investor conclude a
purchase contract under which the ownership right to the real
estate is transferred to the investor.
•
The investor becomes the new owner of the real estate upon
the transaction’s entry in the Land Registry.
•
Main advantage is the universality - the asset deal may be used
when the owner of the real estate is a natural person or if the
owner of the real estate is a company (a legal entity); also pro-
vides the possibility of adjusting the object of the investment
transaction with respect to the special interests and needs
of the investor, by identifying the real estate in detail in the
purchase contract.
Share deal
•
Is the reciprocal undertaking to sell and to purchase where
both parties are committed to transfer the property
•
The transfer remains subject only to the fulfilment of condition
precedents.
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Deed of sale
•
The subject of the transaction is not the real estate but the
company as the owner of the real estate.
•
The main advantage of acquiring real estate via a share deal is
the avoidance of taxes, especially real estate transfer taxes and
VAT.
•
The legal owner of the real estate remains the same, the
acquisition of the real estate has almost no legal impact on the
contracts concluded with respect to the real estate (provided
that the contracts do not include a ‘change of control’ clause).
CoMMERCIaL LEaSES
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Lease
•
No strict formal requirements for an agreement on the lease
of business premises set by the New Civil Code.
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Term and termination
•
Principle of freedom of assignment of the lease by the tenant
definite or indefinite; if the parties do not regulate the lease
term contractually, the lease term is indefinite.
•
If the parties agree on a lease term that is longer than 50
years, it is deemed that the lease term has been concluded for
an indefinite amount of time, whereas in the first 50 years the
lease can only be terminated on the basis of the agreed upon
reasons and in the agreed termination period.
•
Lease agreements concluded for an indefinite period can be
terminated without stating a reason - the period of notice is
six months, unless the party has serious reason for which the
termination period may be three months; the parties are free
to agree on the reasons for the premature termination of the
lease agreement, or on another termination period.
•
.Lease for a definite term can be terminated under statutory
provisions, unless stipulated by the parties otherwise.
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Rent
•
The contracting parties are generally free to negotiate the rent
price and, therefore, any rent increase.
- the rent increase is usually bound to some objective
criterion, such as the inflation rate or some kind of index
(e.g., the consumer price index)
•
Usually, regulation of the tenant’s payments for auxiliary ser-
vices provided by the landlord according to the lease agree-
ment (e.g., electricity, cleaning).
•
Types of rent:
- fixed rent
- turn-over rent (increase of a rent in respect of tenant’s
turnover)
•
A security deposit (or a bank guarantee) amounting to three to
six months’ rent is common practice.
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Sublease
•
If the parties do not stipulate otherwise, the tenant is allowed
to sublease the premises only with the consent of the landlord;
the consent must be in writing.
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Transfer of tenant’s business
•
Tenant is entitled with the landlord’s prior written consent to
transfer the lease in connection with a transfer of the business
activities performed in the leased premises.
