Rents: Can landlord and tenant freely agree rents in Armenia?
Yes. Note that according to the Armenian legislation there is a difference between a "lease" and a "rental" contract.
In a lease contract, the lessor undertakes to provide the lessee with property in exchange for payment for temporary possession and/or use. Rights arising from a contract of lease of immovable property are subject to state registration.
In a rental contract, the lessor undertakes to provide the lessee with movable property for payment for temporary possession and use. The property provided shall be used for consumer purposes, unless otherwise provided by the contract or otherwise follows from the nature of the obligation.
The parties to a lease contract have the right to freely negotiate the initial rent, as well as to increase the rent payments by mutual agreement. The procedure, conditions and time periods for making lease payment shall be determined by the contract of lease. In case they are not determined by the contract, the procedure, conditions, and time periods are considered to be established in the manner usually used for the lease of analogous property types in comparable circumstances.
The amount of lease payment may be changed by mutual agreement of the parties within the time periods provided under the contract, unless otherwise determined by the lease contract. The law may provide other minimum time periods for reconsideration of the amount of lease payment for individual types of lease and also for the lease of individual types of property.
Deposits of any amount are legal. Armenian legislation does not incorporate specifications for security and rental deposits. According to Article 368 of the RA Civil Code the performance of obligations may be secured by a pledge, penalty and retention of property of the debtor, as well as by surety, guaranty, prepayment and other means provided under the law or contract.
In practice the most applicable security mechanism in the context of the lease contract is prepayment, which is a monetary sum given toward payments under the contract to one of the contracting parties by the other party, as a proof of conclusion of the contract and security of its performance. Another mechanism used is the security deposit payment, which is used for final settlement in case the lease is completed or terminated.
What rights do landlords and tenants have in Armenia, especially as to duration of contract, and eviction?
A contract of lease is concluded for the time period determined by the contract. If the time period of the lease is not determined in the contract, the contract of lease shall be considered concluded for indefinite term.
In the case of an indefinite term, each of the parties shall have the right to rescind the contract at any time by warning the other party about it one month in advance, and three months in advance in case of the lease of immovable property. The law or contract may establish a different time period for notice on the termination of the contract of lease concluded for an indefinite term.
The law may establish maximum time periods of contract for individual types of lease and also for lease of individual types of property. In these cases, if the time period of lease is not determined in the contract and none of the parties has rescinded the contract before the expiration of the time period limit established by a statute, the contract shall be terminated upon expiration of the time period limit. A contract of lease concluded for a time period exceeding the time period limit established by a statute is considered concluded for a time period equal to the time period limit.
Effectiveness of the Legal System
In practice, the parties to the lease contract usually try to solve all disputes arising from the contact through negotiation, the court system being used only if no settlement is achieved by negotiation. The timing for collection of unpaid rent might differ based on circumstances of the case. There is no maximum term in the legislation for regulating the disputes arising from civil relations. In practice the duration depends on the circumstances of the relevant case.
The main legal act regulating the relations between Landlord and Tenant is Civil Code of Armenia enforced from 1st of January 1999, which determines both the general provisions of the lease, and the particularities of the specific types of lease, such as lease of a means of transport, lease of a building or structure, financial lease, etc.
The state registration of rights under lease is performed in accordance with the requirements of the Armenian Law "On State Registration of Rights Towards Property" enforced from May 6, 1999 (this relates to registration of rights arising from and in connection with transactions in immovable property/real estate) and Decision of the Government of the Republic of Armenia "On Maintenance of Cadastre of Movable Property, Registration of Right of Pledge of Movable Property and Rights of Lease under the Leasing (Financial Lease) Contracts" enforced from December 28, 2004.
The main legislative act is the Civil Code of Armenia, adopted on 5th of May 1998 and enforced from 1st January 1999. Following its enforcement, the relevant parts/charters of the stated Code regulating the lease relations have been amended only four times by the Armenian Law No. HO-351-N (20 May 2002), Armenian Law No. HO-362-N (29 May 2002), Armenian Law HO-188-N (4 October 2005) and HO-238-N (15 December 2005). Those laws have only amended the provisions of the Code regarding financial lease s(leasing).
In general it may be concluded that the Armenian legislation regulating the lease relations may be considered as pro-tenant.