Understanding the lease (Caritas Luxembourg)

Before moving into an apartment, a lease agreement with the owner is generally completed. A special law complements the provisions of the Civil Code for properties that are being used for residential purposes. This article describes some practical aspects associated with the conclusion, performance and the eventual termination of a residential lease agreement.

1. The conclusion of the lease

The rental agreement is concluded between the tenant and the owner of the apartment. It is recommended to issue a written contract in duplicate, signed by both parties. The duration of the contract is set by the contract itself; an expired temporary contract, which was not terminated, is automatically converted into a permanent tenancy.

The lease shall also fix the amount of the monthly rent and of all other additional charges. It is set by law that the annual rent shall not exceed 5% of the capital invested by the owner. The lease can include a clause whereby the owner keeps the right to change (increase) the amount of the monthly rent every two years.

It is also important to describe the rented dwelling (rooms) in the contract exactly, including annexes, basements, attics, sheds, garages or parking lots. The tenant is often contractually forbidden to sublet the apartment. The rental agreement may also ask tenant to pay the landlord a rent of up to three months. This money is used to secure the rental payments and any other rental costs.

It is advisable to make an inventory of the state of the apartment between the owner and the tenant. This must be provided in two copies before the tenant moves into the premises and has to be signed by both parties. The inventory accurately describes the condition of the building, its facilities and any existing damage.

2. The obligations borne by landlord and tenant:

The main duties of the landlord are:

• To make the premises available to the tenant and not to interfere with their use; often the contract includes a clause whereby the owner is allowed to visit the apartment once a year.
• To pay for the general maintenance of the dwelling or building.
• To pay for major and structural repairs of the leased premises (e.g. roof repairs).

The main duties of the tenant are:

• To pay the monthly rent on time as per the contractual obligations and pay the guarantee to the owner if this clause is stipulated by the lease.
• To use the rented premises solely for residential purposes.
• Tenant is also responsible for any damage caused to the rented premises; he bears responsibility for the ordinary maintenance and for minor repairs of the leased property.
• The tenant must respect and comply with all provisions listed in the residential lease agreement.

It is highly recommended, and often set mandatory in the lease, that the tenant signs an insurance policy for the apartment that covers at least fire and water damages as well as breakage. It is also recommended that the tenant insures his own furniture and any other personal belongings stored in the apartment.