Recognition of a real estate lease agreement as invalid
Leasing real estate is a common practice among both individuals and legal entities. However, there are cases when a lease agreement may be invalidated in court. In this article, we will consider the main grounds, the procedure for invalidating a lease agreement and the legal consequences of such invalidation.
1. Grounds for invalidation of a lease agreement
Pursuant to Article 215 of the Civil Code of Ukraine (CCU), a transaction that does not comply with the law or violates the rights and interests of others is invalid. The main grounds for invalidating a real estate lease agreement include:
1.1. Failure to comply with the requirements for the form of the agreement
- Pursuant to Article 793 of the CCU, a real estate lease agreement shall be concluded in writing.
- If the lease term is three years or more, such an agreement is subject to notarization and state registration in accordance with Article 794 of the CCU.
- Failure to comply with these requirements may be grounds for invalidation of the agreement.
1.2. Lack of authority of the parties
- If an agreement is signed by a person who does not have the appropriate authority (for example, without a power of attorney or in excess of his or her rights), it may be declared invalid.
- The agreement will also be invalid if the lessor did not have the right to lease the property (for example, due to lack of ownership or relevant permits).
1.3. Deception, violence, malicious agreement
Pursuant to Articles 230-232 of the Civil Code of Ukraine, a contract may be declared invalid if one of the parties entered into it:
- under the influence of deception or misrepresentation;
- under duress or violence;
- as a result of a malicious agreement between a representative of one party and the other.
1.4. Violation of public policy
The agreement may be declared null and void (invalid from the moment of conclusion) if it violates the interests of the state or society (for example, lease of an object subject to demolition or prohibited for use).
1.5. Lease of property that is not subject to lease
If the law prohibits the lease of certain objects without special permission (for example, state or municipal property without the approval of the relevant authorities), the agreement may be declared invalid.
2. Procedure for invalidating a lease agreement
A lease agreement can only be invalidated by a court at the request of an interested party or third parties whose rights have been violated. Procedure:
- Filing a lawsuit with the court
The lawsuit is filed with the commercial court (if the parties are legal entities) or with the general court (if at least one party is an individual).
The lawsuit must substantiate the grounds for invalidity and provide evidence of a violation of the law. - Court proceedings
The court analyzes the evidence, the circumstances of the contract and its compliance with the law. - If the court declares the contract invalid, it becomes null and void from the moment of its conclusion (if it is a void contract) or from the moment of the court’s decision.
3. Consequences of invalidation of the lease agreement
The following consequences follow upon invalidation of the lease agreement:
- The parties return to their original state (status quo)
- The lessee is obliged to vacate the premises.
- The lessor must return the money received (if the agreement was void).
- Compensation for losses
- A party that has suffered losses due to an invalid contract may seek compensation in court.
- Preventing the use of property
- If a contract is declared invalid due to the illegal use of an object, the court may prohibit the use of this property until the violations are eliminated.
Contact GlobalBud Ukraine
The invalidity of a real estate lease agreement can have serious consequences for both parties. To avoid legal risks, before signing the agreement, you should carefully check its content, compliance with the law and the legal capacity of the parties.
If you need a legal analysis of a lease agreement, preparation of a claim or representation in court, please contact GlobalBud Ukraine. Our lawyers and real estate experts will help you protect your rights and avoid problems with the law.
