Premises lease contracts are common transactions in business activities and daily life. However, the execution of such contracts does not always proceed smoothly, which may arise legal disputes. Understanding the practical situation, legal regulations, and dispute resolution mechanisms concerning lawsuits related to premises lease contracts is important in safeguarding the lawful rights and interests of the parties.

I. Current situation of lawsuits related to premises lease contracts

In practice, lawsuits related to premises lease contracts occur quite frequently, particularly in major cities where real estate values are high and business activities are vibrant.

Disputes commonly revolve around issues such as delayed payment of rent, unlawful unilateral termination of contracts, premises conditions failing to meet agreed standards, disputes over repair and renovation of premises, or other matters concerning the rights and obligations of lessors and lessees.

II. Legal regulations on lawsuits related to premises lease contracts

1. What is a premises lease contract?

Pursuant to Article 472 of the Civil Code 2015: A property lease contract is an agreement between the parties whereby the lessor delivers the property to the lessee for use for a specified period, and the lessee is obliged to pay rent.

Accordingly, a premises lease contract is a form of property lease contract in which the lessor delivers the premise to the lessee for use for a certain period for business, production, or other purposes, and the lessee is obliged to pay the rental fee as agreed.

2. Disputes related to premises lease contracts

Some common disputes currently arising from premises lease contracts include:

  • Disputes over rent payment obligations: Late payment, non-payment, or disputes over rental rates.
  • Disputes over unlawful unilateral termination of contracts: Where the lessor or lessee unilaterally terminates the contract before its expiry or without lawful grounds.
  • Disputes over the condition of the premises: The premises don’t meet the originally agreed conditions or damage not being repaired.
  • Disputes over repair and renovation of the premises: Determination of the responsible party and allocation of repair or renovation costs.

3. Competent authorities to resolve disputes related to premises lease contracts

When disputes arise, the parties may resolve them through the following methods:

  • Negotiation and mediation: The parties reach an agreement themselves to resolve the dispute.
  • Courts: If negotiation or mediation fails, either party has the right to initiate a lawsuit before a competent People’s Court to request dispute resolution (Article 26 of the Civil Procedure Code 2015).
  • Commercial arbitration: Where the dispute relates to commercial activities and the parties have agreed to resolve disputes by arbitration (Articles 2 and 5 of the Law on Commercial Arbitration 2010).

Accordingly, disputes arising from premises lease contracts shall be resolved by competent People’s Courts in accordance with civil procedural law. Where the contract contains an agreement on commercial arbitration, the parties may request arbitration for dispute resolution. 

III. Common questions on lawsuits related to premises lease contracts

1. Common disputes related to premises lease contracts

Disputes arising from premises lease contracts are diverse, but the most common include:

  • Disputes over rent payment obligations;
  • Disputes over unlawful unilateral termination of contracts;
  • Disputes over the condition of the premises;
  • Disputes over repair and renovation of the premises.

These disputes often significantly affect the interests of both lessors and lessees and require strict legal resolution regimes. 

2. Is notarization mandatory for premises lease contracts?

Pursuant to Point b, Clause 3, Article 27 of the Land Law 2024: Contracts for lease or sublease of land use rights, land use rights and land-attached assets; contracts for exchange of agricultural land use rights; contracts for transfer or capital contribution using land use rights, land use rights and land-attached assets, or land-attached assets, where one or more parties to the transaction are organizations engaged in real estate business, shall be notarized or authenticated at the request of the parties. 

Currently, the law does not require premises lease contracts to be notarized, unless otherwise agreed by the parties. However, to enhance legal validity and minimize the risk of disputes, the parties are advised to notarize or authenticate the contract at a notarial practice organization.

3. Main points to note when initiating the lawsuit related to the premises lease contract

When deciding to initiate the lawsuit related to the premises lease contract, the claimant should note the following:

  • Correctly identify the competent court with jurisdiction over the case.
  • Preparing a complete set of documents and evidence to substantiate the claims (e.g., lease contracts, payment receipts, images, videos, etc.).
  • Clearly stating the claims (e.g., requesting the other party to pay outstanding rent, compensation for damages arising from unlawful unilateral termination of the contract).
  • Complying with statutory time limits for initiating lawsuits in accordance with civil procedural law.

Observance of the above points helps ensure smooth litigation proceedings and the best possible protection of one’s lawful rights and interests. 

4. Where the contract does not clearly specify responsibility for repairs, which party is responsible?

Pursuant to Clause 1, Article 477 of the Civil Code 2015: The lessor must ensure that the leased property is in the condition as agreed and suitable for the leasing purpose throughout the lease term; and must repair defects or damage to the leased property, except for minor damage which the lessee must repair according to local custom. 

In addition, Clause 1, Article 479 of the Civil Code 2015 on the obligation to preserve leased property provides: The lessee must preserve the leased property, perform maintenance and minor repairs; if the property is lost or damaged, compensation must be paid. The lessee shall not be responsible for natural wear and tear arising from use of the leased property.

Accordingly, unless otherwise agreed by the parties, the lessor is responsible for repairing major defects or damage to the premises, while the lessee is responsible for preservation and minor repairs.

5. If the lessor abruptly reclaims the premises before expiry of the lease term, is the lessee entitled to compensation?

Pursuant to Clauses 1 and 2, Article 172 of the Law on Housing 2023, the lessor may not unilaterally terminate the execution of a housing lease contract and reclaim the leased housing, except in the following cases:

  • The lessor leases public housing, social housing, housing for the people’s armed forces, or worker accommodation in industrial zones without proper authority, to improper subjects, or without satisfying statutory conditions;
  • The lessee fails to fully pay rental fee for three months or more without a reason agreed in the contract;
  • The lessee uses the housing for purposes other than those agreed in the contract;
  • The lessee arbitrarily drills, expands, renovates, or demolishes the leased housing;
  • The lessee exchanges, lends, or subleases the leased housing without the lessor’s consent;
  • The lessee causes disorder or environmental pollution seriously affecting surrounding residents and fails to remedy the situation after being recorded in writing for the third time by the lessor or local authorities;
  • Cases specified in Clause 2, Article 170 of this Law.

Clause 4, Article 428 of the Civil Code 2015 provides: A party suffering damage due to the other party’s failure to properly execute contractual obligations is entitled to compensation.

Accordingly, where the lessor unlawfully unilaterally terminates the contract before its expiry, the lessee has the right to claim compensation.

IV. Legal consulting services on lawsuits related to premises lease contracts

The above is NPLaw’s article on lawsuits related to premises lease contracts. With a team of experienced lawyers and legal specialists, NPLaw provides reputable and professional legal services to best protect the lawful rights and interests of clients. Should you require legal assistance, please contact NPLaw for consultation and support.