Lease of office buildings and business premises in the future

Authors: Nino Bostič Sluga, Blaž Ogorevc

On 19 June 2021, the Act amending the Housing Act (Zakon o spremembah in dopolnitvah Stanovanjskega zakona; SZ-1E) entered into force. Although SZ-1E predominately – as one can expect – regulates its principal legal field of private housing, it also significantly affects the regulation of business leases. Namely, SZ-1E contains a peculiarly placed transitional provision which repeals, in its entirety, the Business Buildings and Business Premises Act (Zakon o poslovnih stavbah in poslovnih prostorih; ZPSPP).

In the recent years, this semi centennial piece of legislation which derives from the past political, social and legal regime, has been increasingly criticized for being not only terminologically but also conceptually obsolete. Its contradiction with a more recent but general legal regime provided by the Obligations Code (Obligacijski zakonik; OZ) caused a fair degree of ambiguity which was further enhanced by inconsistent case-law.

Undoubtedly, business leasing is a specific legal area that would require a comprehensive renovation and a systemic approach to statutory regulation, however, the legislator has not taken this route but only “incidentally” repealed the ZPSPP. As a consequence, the future lease relations shall – until (and if) a new piece of legislation is adopted – be subjected only to the provisions of the Obligations Code. Upon critical examination of the latter, we can quickly realize that they are not the most suitable for regulating complex lease relationships that typically arise in daily business.

It is worth mentioning that the provisions of the ZPSPP will continue to apply to all contracts concluded before 19 June 2021; however, when adopting new leases, the landlords and tenants alike will have to pay attention mostly to the changes on following significant issues brought into practice by the repeal of the ZPSPP:

• abolition of certain mandatory provisions regarding minimum notice periods;
• possibility of withdrawal from or termination of lease contracts;
• procedure of termination of lease contracts;
• conditions for the transformation of a fixed-term lease contract into a contract for indefinite time;
• restrictions on the sub-lease.

The repeal of the ZPSPP and the exclusive application of provisions of the Obligations Code that regulate the lease contract shall give rise to new dilemmas and questions, which will have to be addressed by legal practitioners and, eventually, the competent courts. Clients are therefore advised to be even more careful when concluding or prolonging lease contracts and should adapt their existing drafts, where necessary. Detailed negotiation of terms of the lease contracts should be undertaken in order to avoid uncertainties brought by the current (under)regulation, specifically since no new legislation appear to be in preparation.