Rents: Can tenants and landlords freely agree to rents in Armenia?
Yes. Note that there is a difference between a “lease” and a “rental” agreement under Armenian law. ادهنتر
In a lease contract, the landlord undertakes to provide the leaser with a property for temporary ownership and/or use in exchange for payment. Rights arising from a lease contract are subject to registration by the State.
In a rental contract, the rental company undertakes to supply mobile property for temporary possession and use by the leaser. Unless otherwise provided in the Contract or otherwise as a consequence of the nature of the obligation, the property provided shall be utilized for consumer purposes.
The parties to a rental contract have the right, by mutual agreement, to freely negotiate the initial rental and to increase the rental payments. The procedure, terms and periods of payment for the leasing shall be determined by the lease contract. If the contract is not determined, the procedure, conditions and periods of time shall in the manner usually used to lease analog property types in the same circumstances be considered to be established.
Unless otherwise agreed by the lease agreement, the amount of the lease payment may be changed within the time limits provided for under the contract. The law may establish other minimum periods to reconsider the amount of lease payment for each lease type and also for the lease of individual property types.
Deposits of Security
Any amount of deposits is legal. Armenian legislation does not include security and rental deposit specifications. In accordance with Article 368 of the RA Civil Code, the execution of obligations may be secured through the undertaking, penalty, retention of the debtor’s property and by guarantee, guarantee, advance payment and other means provided for pursuant to the Act or contract.
In practice, in the context of a leasing agreement, the most applicable security mechanism is pre-payment, i.e. a monetary sum granted under the contract to one party under the other to payments as proof of contract conclusion and security of performance. Another mechanism used is the payment by security deposit used for final settlement in the event that the rental is completed or terminated.
What rights have landlords and tenants in Armenia, especially regarding contract duration and expulsion?
A lease contract is concluded for the period of the contract. When the lease period is not fixed in the contract, the lease agreement is considered to have been concluded indefinitely.
In the event of an indefinite term, each party has the right at all times to cancel the contract by warning the other party one month in advance and three months in advance if the property is being rented out. The law or contract may specify a different period of notice when the lease contract concluded for an indefinite term is terminated.
The law may establish maximum contract periods for individual types of rent and also for the rental of individual property types. If the term of the lease is not determined by the contract in such cases, and none of the parties has withdrawn from the contract prior to the expiry of the statute period, the contract is terminated after the expiry of that period. A lease agreement concluded for a term period exceeding the period laid down by the statute shall be deemed to have been concluded for a time period equal to the time period.
Legal system effectiveness
In practice, the parties to the lease usually attempt to resolve all disputes arising from the contact through negotiation, using the court system only if negotiation does not reach a solution. The time to collect unpaid rents may vary according to the circumstances. There is no maximum term in the legislation to regulate civil relations disputes. In practice, the time depends on the circumstances of the case in question.
The major legal act regulating the relations between the landlord and the tenant is the Armenian Civil Code enforced on 1 January 1999, which sets out both the general provisions of renting, as well as specific characteristics for specific types of rent, for example renting a means of transport, building or structure rental, financial rental, etc.
State registration of the rights under lease is carried out pursuant to and in connection with the requirements of the Armenian Law of 6 May 1999, “The State Registration of Rights to Property,” and of “The Government of the Republic of Armenia’s Maintenance Decision on the registration of rights arising from and in relation to immovable real estate transactions”
The Civil Code of Armenia, adopted on 5 May 1998 and implemented as from 1 January 1999, is the main legislative act. Following enforcement of the law, it was amended only 4-fold by Law No. HO-351-N (20 May 2002), by Law No. HO-362-N (29 May 2002), by Armenian Law No. HO-188-N (4 October 2005) and by Law No. HO-238-N (4 October 2005) on lease relations (15 December 2005). These laws have only modified the provisions of the Financial Leasing Code (leasing).
It can be concluded, in general, that the Armenian rental law may be considered as pro-locator.