58 | Investor Guide to Europe 2014
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Pledge
•
Pledge should be understood as a pledging of a movable thing
or real rights securing the discharge of an existing or future
debt obligation when the object of the pledge is transferred to
the creditor, a third person or remains with the pledger;
•
Pursuant to the pledge, the creditor (the pledgee) has the right
to satisfy his claim from the value of the collateral prior to
other creditors, if the debtor fails to discharge the obligation
secured by the pledge (in the event of default).
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 (with an exception of agricultural land
1
) may be sold to
foreign investors that meet the criteria of European and Trans-At-
lantic integration
2
.
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.
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negotiations
•
The non-disclosure agreement is proposed by the one of the
parties in order to protect information on the further tran-
saction 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.
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Preliminary agreements
•
The parties may choose to not to conclude a preliminary
agreement and sign main agreement with (or without) post-
ponement 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) arrange-
ment of the parties to conclude main agreement in the future;
(ii) provisions specifying the property and conditions prece-
ding; (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.
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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-accep-
tance deed. The title of property may be passed with the main
agreement if parties explicitly agree on it in the main agree-
ment; 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.
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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 agree-
ment 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 lan-
dlord does not pursue to evict the tenant the lease agreement
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