standard form contract for lease eng

8/13/2019 Standard Form Contract for Lease ENG

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Table of Contents

STANDARD FORM CONTRACT FOR COMMERCIAL LEASES ................................................................. - 2 -(1) SCHEDULE ..................................................................................................................................... - 2 -(2) GENERAL TERMS AND CONDITIONS ............................................................................................. - 7 -1. Special Pre-Conditions ................................................................................................................... - 7 -2. Premises ........................................................................................................................................ - 7 -3. Term, Extensions and Early Termination ...................................................................................... - 7 -4. Rent and Payment .......................................................................................................................... - 8 -5. Landlords Warranties and Indemnities ......................................................................................... - 9 -6. Landlords Duties .......................................................................................................................... - 11 -7. Tenants Warranties, Rights and Responsibilities ........................................................................ - 12 -8. Remedies ...................................................................................................................................... - 14 -9. Disputes and Applicable Law ....................................................................................................... - 15 -10. General ....................................................................................................................................... - 15 -

USERS GUIDE TO THE STANDARD FORM FOR COMMERCIAL LEASE CONTRACTS ........................... - 17 -1. Special Pre-Conditions ................................................................................................................. - 17 -2. Premises ....................................................................................................................................... - 18 -3. Term, Extensions and Early Termination ..................................................................................... - 18 -4. Rent and Payment ........................................................................................................................ - 19 -5. Landlords Warranties and Indemnities ....................................................................................... - 20 -6. Landlords Duties .......................................................................................................................... - 25 -7. Tenants Warranties Rights and Responsibilities ......................................................................... - 27 -8. Remedies ...................................................................................................................................... - 30 -9. Disputes and Applicable Law ....................................................................................................... - 31 -10. General ....................................................................................................................................... - 33 -

GENERAL GUIDELINES TO THE STANDARD FORM COMMERCIAL LEASE CONTRACT ....................... - 35 -The Concept of a Lease .................................................................................................................... - 35 -Formal Requirements for Lease Signature....................................................................................... - 35 -Tracing Property Ownership ............................................................................................................ - 36 -Lack of Permits ................................................................................................................................. - 36 -Unpaid Utility Bills ............................................................................................................................ - 37 -Checks on a Tenant .......................................................................................................................... - 37 -Lease Duration and Early Termination ............................................................................................. - 37 -Rental Payments .............................................................................................................................. - 37 -Late Payment ................................................................................................................................... - 38 -Repairs.............................................................................................................................................. - 38 -


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Standard Form Contract for Commercial Leases with Legal Commentary and User`s Guide - 2 -

STANDARD FORM CONTRACT FOR COMMERCIAL LEASES

The Lease Agreement is two parts:(1) the Schedule, and(2) the General Terms and Conditions.

DATE:

PARTIES:

1. Landlord(s):

2. Tenant(s):

(1) SCHEDULE

This Schedule should be read in conjunction with the attached General Terms and Conditions, andthen completed in detail. Guidance Notes are provided alongside the General Terms and Conditions.

ClauseNumber

Insert details in this column, or select Yes/No,etc.

10.2Contact Details (including fornotices):

Landlord(s)

Name(s):

Address:

ID number or businessregistration number:

Fiscal number:

Phone number:

Email:

Tenant(s)


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Name(s):

Address:

ID number or businessregistration number:

Fiscal number:

Phone number:

Email:

2.1Cadastral Details

Cadastral zone/municipality:

2.1 Parcel number:

2.1Premises

Address:

2.1Describe area leased:

Number of floors:

2.1 Square meters:

2.2Parking space(s)?

Describe space(s):

Yes / No

2.2 Outside walls included? Yes / No

Is a plan attached? Yes / No

1.1

Special Conditions

Describe any work to be carriedout by the Landlord before the


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Start Date of the Lease, orother agreed date:

1.2Describe any documents to beprovided before the Start Date,

or other agreed date:

1.4

State any change from the dailypenalty rate for failure to complywith Pre-Conditions:

3 Term of Lease

3.1 Start Date:

3.1 End Date:

3.2 Tenant has Right to Extend? Yes / No

3.2 Length of Extension:

3.3 Is Tenant able to terminate theLease early? Yes / No

3.3 Length of notice for earlytermination Days

4 Rent

4.1 Amount in Euros:

4.4Frequency of Rent PaymentsDue: Monthly / Quarterly / Yearly

4.5 Date Rent is Due:

4.3 Landlords Bank Name:

4.3 Landlords Account Number:

5 Any disclosures by Landlord


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about the property, such asproblems with building permits,etc.?Describe in detail, including anyproposed remedy:

1.3 and7.5.3 Security Deposit? Yes / No

1.3 and7.5.3

Amount of Security Deposit, inEuros:

6.2.1

Repair obligations

State here any changes to thearrangements in the clauses:

6.2.1State here whether Tenant orLandlord is responsible forrepairing heating and radiators: Landlord / Tenant

Utilities and Municipal Tax

6.4 and 7.2Does the Rent include the costof all utilities?

Yes / No

Changes to the standardprovisions in the Lease onutilities (if changes are notclear, then general termsapply):

Is the Tenant responsible forpaying electricity?

Yes / No

Is Tenant responsible for water

charges?Yes / No

Is Tenant responsible forrubbish collection payments? Yes / No

Is Tenant responsible for districtheating charges? Yes / No

Is Tenant responsible fortelecoms and internet? Yes / No

7.2.2

Is the Landlord is going to be

responsible for payingmunicipal property tax? Yes / No


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7.3.1

Purpose of Use by Tenant

Describe here the purpose forwhich the Tenant will use thePremises, for example, a

warehouse, shop, or restaurant:

7.3.2 Does the Tenant have a right toput signage on the building? Yes / No

7.3.2

Does the Tenant have the rightto make alterations to thePremises?

If yes, detail the changespermitted:

Yes / No

6.7State any changes to theClause that addresses leasingto competitors:

7.4 Subleasing permitted? Yes / No

7.5.1

List the Landlords property,e.g. furniture, which is includedwith the Lease, and state itscondition:

9.3

Mediation/ArbitrationInstitution that will be used in

case of dispute:

Kosovo Chamber of Commerce

or

American Chamber of Commerce in Kosovo

Schedule notes:


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(2) GENERAL TERMS AND CONDITIONS

RECITALS

A. The Landlord owns certain land and building(s) with the Cadastral Details noted in theSchedule.

B. The Tenant wishes to lease from the Landlord, and the Landlord wishes to lease to theTenant, the Premises described in the Schedule pursuant to the terms and conditions in thisAgreement or Lease.

1. Special Pre-Conditions

1.1 The Landlord agrees to carry out the works/renovations/adjustments described in the Schedule on

or before the Start Date or the date specified in the Schedule.

1.2 The Party/Parties described in the Schedule agree to provide the document(s) described in theSchedule on or before the Start Date, or the date specified in the Schedule.

1.3 If indicated in the Schedule, the Tenant agrees to pay the Security Deposit on or before the StartDate.

1.4 If a Special Pre-Condition(s) is not met by the Landlord, the Tenant may either terminate thisLease immediately on written notice to the Landlord, without penalty or charge, or the Tenant maycharge the Landlord a penalty as set out in the Schedule for each day that the Landlord is late incomplying.

1.5 If a Special Pre-Condition is not met by the Tenant, then the Landlord may terminate this Leaseon written notice to the Tenant before the Start Date, without penalty or charge.

2. Premises

2.1 The Landlord hereby leases to the Tenant, and the Tenant hereby leases from the Landlord, thePremises described in the Schedule, together with the right to use any of the Landlordsitems/furniture listed in the Schedule.

2.2 The Premises include the car parking space(s) and any yard or outside space described in the

Schedule, and unless stated otherwise in the Schedule, any appurtenances and the outside walls androof where relevant.

3. Term, Extensions and Early Termination

3.1 Term

Subject to other terms in this Lease, the Term of the Lease shall be the period that commences on theStart Date in the Schedule, and expires on the End Date in the Schedule.

3.2 Extension


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3.2.1 If the Schedule indicates that the Tenant has a Right to Extend, then the Tenant may extend theTerm of the Lease once for the Extension Period set out in the Schedule, or if no period is soindicated, for the same period as the initial Lease. If the Tenant wishes to exercise its Right to Extend,it must give the Landlord at least sixty (60) days written notice prior to the initial End Date, statingthe Tenants wish to extend.

3.2.2 If the Tenant exercises this Right to Extend the Term, all terms and conditions of the Lease shallremain as provided here.

3.3 Early Termination

Unless the Schedule indicates otherwise, the Tenant may, in its sole and absolute discretion, duringthe Term terminate this Lease at any time before the End Date, or the end of any Extension period,without penalty by giving prior written notice to the Landlord of the Tenants intention to terminate.The Tenant must give the prior written notice to the Landlord at least sixty (60) days, or any othernotice period indicated in the Schedule, before the intended termination date.

4. Rent and Payment

4.1 The Tenant shall pay the Landlord the Rent set out in the Schedule during the Term, and anyextension. In addition to the Rent, the Landlord may charge VAT if required by law, provided thatthe Landlord provides a copy of his VAT certificate and a valid VAT invoice to the Tenant.

4.2 The Landlord shall, if requested by the Tenant, provide the Tenant with a valid tax invoice for theRent and any VAT. The invoice shall include the Landlords full name, fiscal number, VAT number(if relevant), date and rent period, and shall itemize the VAT separately.

4.3 The Tenant shall pay the Rent to the Landlord by making payment into the Landlords bankaccount that is noted in the Schedule, or into any replacement bank account in the Landlords namethat the Landlord notifies the Tenant of in writing at least seven (7) days prior to the due date for theRent.

4.4 The Rent shall be paid as set out in the schedule, for example, monthly, quarterly or yearly.

4.5 The Rent shall be paid on the Payment Date for the Rent set out in the Schedule, except for thefirst payment, which must be made the day after the Leases signing. If the date this Leases signing isnot the Payment Date for the Rent, then the amount of rent due after signature but before the nextagreed-to Payment Date shall be pro-rated to the next Payment Date. All payments shall be made inEuros.

4.6 If this Lease is validly terminated before the End Date or the end of an Extension Period, then theRent shall be paid on a pro-rated basis up to, and including, the date on which the Lease terminates.All advance payments of Rent shall be refunded by the Landlord in the amount that corresponds to the

period of time after the termination date that the Tenant has given valid written notice of.

4.7 If the Tenant is late paying the Rent by more than three (3) days, then the Landlord may byinvoice charge the Tenant interest on the late payment from the date of late payment until actual

payment at the average Kosovo bank overdraft rate set out in the most recent Central Bank of Kosovo publication prior to the date the Rent was due.

4.8 The Rent indicated in the Schedule is the gross Rent, unless otherwise stated. The Tenant shall

deduct any tax withholding required by law from the Rent on behalf of the Landlord, and the Tenant


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shall provide an annual tax withholding certificate to the Landlord, as required by law. Taxwithholdings are not deducted from the VAT element.

5. Landlords Warranties and Inde mnities

If the Landlord is in breach of or wishes to make a disclosure under any of these warranties at or priorto the Leases execution and the Tenant agrees to accept that breach or disclosed breach and not claimfor the breach, this will be stated in the Schedule.

5.1 Ownership

The Landlord warrants that:

5.1.1 It is the sole and lawful owner (or, in the case of formerly socially-owned property, owner of a99-year lease) of the Premises, and that the Landlord is duly authorized and able to enter into thisLease and perform the obligations set out in this Lease;

5.1.2 It owns and has all rights to use and enjoy the Premises (including any land underneath thePremises), and is the valid registered owner (either of full title or a 99-year lease) in the relevantKosovo cadastre;

5.1.3 It will provide the Tenant with an up-to-date, stamped possession list/certificate of ownershipfrom the cadastre for the Premises on the Tenants request, and on the condition that the Tenant paysthe cadastral fees for obtaining this document. This document may be requested by the Tenant notmore often than once every six months.

5.2 Vacant Possession and Undisturbed Use


5.2.1 The Tenant may peaceably enjoy vacant possession of the Premises throughout the Term, andwill be able to use the Premises for the Purpose of Use described in the Schedule for the Term (andany extensions thereof) without any interruption or disturbance from Landlord, or any other personclaiming by, from, through, or under the Landlord, or acting as agent of the Landlord, and without theLandlord occupying the Premises, whether via its or others belongings, rubbish or waste;

5.2.2 It knows of no likely disturbance from neighbors, and that none of the activity of the neighborsis likely to disturb the intended Purpose of Use described in the Schedule by the Tenant.

5.3 Authority to Enter into LeaseThe Landlord warrants that:

5.3.1 It has full right, power, and authority, under applicable laws, rules, and regulations in effect inKosovo and the municipality where the Premises are situated, to execute and deliver this Lease, and

perform all of the Landlords obligations in the Agreement during the Term of the Lease, includingany extensions to the Term; and

5.3.2 Its execution of this Lease and the exercise of the rights and obligations by the Landlord underthis Agreement do not constitute, and will not result in, any breach of any other agreement that theLandlord has entered into.

5.4 Compliance with the Law, Regulations and Lender Requirements


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5.4.1 The Premises comply with all applicable laws, rules and regulations of all public authorities inrelation to the Purpose of Use set out in the Schedule, including that the Premises meet all buildingregulations relating to standards and quality of build, including seismic regulations, and the Premisesare safe, secure and fit for the Purpose of Use set out in the Schedule;

5.4.2 The Premises have a building permit that covers the full extent of the build of the Premises, andthe Premises have received the technical acceptance certificate and permit for use, and any othernecessary certificates for the intended Purpose of Use, from the municipality. Further, the Premisesfully comply with these and the building permit, and other certificate fees have been fully paid. Uponrequest, the Landlord will provide the Tenant on with a copy of the building permit, technicalacceptance, and any other relevant permits, and evidence of payment of the related fees;

5.4.3 There is no reason related to the Premises as to why the Tenant will not be able to obtain a business or municipal permit for the Premises that is required for the intended Purpose of Use

described by the Tenant in the Schedule;

5.4.4 All consents, approvals, licenses, and authorizations required of any governmental authoritynecessary for the Landlords execution, delivery, and performance of this Lease have been obtained,and are in full force and effect;

5.4.5 There is no reason why a municipal permit for a generator to be installed in or near thePremises, or permits for the Tenants usual signage on the Premises consistent with the Purpose ofUse by the Tenant, will not be obtained from the municipality;

5.4.6 There is no mortgage, tax lien or other lien on the Premises, other than that disclosed in writingto the Tenant, and that any mortgage holder has consented to the Lease.

5.5 Utilities and Municipality Property Tax

The Landlord warrants:

5.5.1 There are no unpaid bills or debts relating to electricity, water, rubbish, district heating, telecom,internet (utilities ) for the Premises, and no disputes with the utilities companies relating to thePremises;

5.5.2 The Premises has its own separate utilities connections, or there is no reason why suchconnections will not be obtained, and why internet or telecom or other connections will not be

possible;

5.5.3 There are no unpaid municipality property tax bills, and the Landlord itself or the Landlords business has no tax or other debts that could affect the Premises.

5.6 Disputes Regarding Use, Ownership and Re-development

The Landlord warrants:

5.6.1 It has not received (itself or via anyone else) notice of any formal or informal claims or disputesrelating to the Premises, including claims of ownership or access rights by a third party;

5.6.2 It has not received any notice of expropriation or intention to redevelop from the municipality orany other public body in Kosovo, and is not aware of any intention to re-develop the Premises orlocations near the Premises;


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5.6.3 It has not received any notice of non-compliance with construction permits, use permits,municipality, laws or building regulations, and no environmental notice, and is not aware of any

pending proceedings or of any infringement due to any such non-compliance.

6. Landlords D uties

6.1 Delivery of the Premises

The Landlord shall cause the Premises to be vacated and deliver the Premises to Tenant in a properstate and condition for the Purpose of Use, so that the Tenant can move in by the Start Date.

6.2 Repairing and Maintaining the Premises

6.2.1 Unless other repair and maintenance arrangements are set out in detail in the Schedule, theLandlord shall be responsible at its own cost for undertaking prompt remedial repairs and preventativemaintenance of the structure, so that the Premises remain fit for the Purpose of Use. The structureshall include the roof, outside walls, plumbing, and guttering, and unless the Schedule statesotherwise, electrical wiring, heating and radiators, but shall exclude any interior parts of the BusinessPremises that are not structural, such as interior floors, interior walls, and sanitary facilities. TheLandlord will to the extent possible arrange repair and maintenance in a way that causes the minimumdisruption to the Tenants business. For example, repairs and maintenance should be conductedoutside of business/office hours, and the Landlord will give the Tenant at least fourteen (14) daysadvance written notice of such, except in an emergency.

6.2.2 If any plumbing or electrical repairs arise from the misuse or use of the Tenant, such as blockages caused by or via the Tenant, or if the need for repairs arises from the Tenants installations,the Landlord may charge the Tenant a reasonable amount for the costs of such repairs. The Landlordmust present evidence to the Tenant of the costs, including valid tax invoices for its purchases; theLandlord may not charge any mark-up or make any profit on this activity.

6.3 Recording the Long-term Lease in Cadastre, Notification of Mortgage Holders

The Landlord shall:

6.3.1 If the Tenant requests, record or register the existence of this Lease as an encumbrance againstthe relevant parcel number in the cadastre. The Tenant will pay the cadastral fees for such registration;

6.3.2 Notify any lender or holder of any mortgage over the property of the existence of this

Agreement and any extension of the Term and shall obtain consent from the lender or mortgageholder where appropriate to the Lease.

6.4 Utilities

Unless the Schedule indicates that the Landlord is responsible for any relevant utilities and they areincluded in the Rent, the Landlord will:

6.4.1 Ensure the relevant utilities bills for utilities required by the Tenant are transferred to theTenants business name without delay and with zero debts, or the Landlord shall take all measures tofacilitate a separate utility connection for the Tenant in the Landlords name if the Premises are part ofa larger building with a single utility connection;


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7.2.2 Unless the Schedule states that the Landlord is responsible, the Tenant shall promptly pay themunicipal property tax, either by bills from the Landlord, or if the Tenant so requires, by direct bills inthe Tenants own name.

7.2.3 The Tenant may (but shall have no obligation to) take out any insurance in relation to its own property, the Landlords property, or the Premises.

7.3 Use of the Premises, Alterations

7.3.1 The Tenant may use the Premises only for the Purpose of Use described in the Schedule. If theTenant wishes to change the Purpose of Use, it must obtain written consent from the Landlord, andsuch consent must not be unreasonably withheld or delayed.

7.3.2 Unless the Schedule or the Plan indicates otherwise, the Tenant may use the outside of thePremises, including but not limited to attaching signs on the outside of the Premises, or parking cars,generators, furniture or other items, and provided that the Tenant obtains the relevant permissionsrequired by law. The Tenant may also apply for permits for use of the municipality or other land in

the vicinity without notifying the Landlord.

7.3.3 The Tenant may make internal and limited external alterations to the Premises, unless otherwisestated in the Schedule. Internal alterations may include destroying non-load-bearing walls, or puttingin flooring or a kitchen and sanitary facilities, provided that any demolition or alteration does notaffect the stability of or value of the Premises, and provided that all alterations comply with buildingregulations and applicable law. The Tenant shall provide the Landlord with evidence of compliancewhen appropriate. Further, unless otherwise stated in the Schedule, the Tenant may provided itcomplies with the law and regulations attach or install signs and air conditioning units, cables and

pipes, security alarms, fire prevention equipment, heating and cooling systems, and if necessary,satellite or radio receiver equipment onto or within the Premises. The Tenant shall, however, ensurethat at the end of the Term or any extension, the Premises are returned to a similar condition (although

subject to wear and tear) as existed on the Start Date of the Lease.

7.4 Sub-Leasing

Unless the Schedule states otherwise, the Tenant may sub-lease all or part of the Premises by givingwritten notice to the Landlord with the sub- lessees details, and the details of any sub -leasearrangement. If sub-leasing is permitted and occurs, the Tenant will still be responsible forcompliance with this Lease, including both with regard to Rent payment and liability for the actions orinactions of the sub-lessee.

7.5 Maintenance and Security, Including Security Deposit

7.5.1 Unless per Clause 7.3.3 above, the Tenant may not destroy or damage the Premises, or any itemsof the Landlord that are listed in the Schedule. If the Tenant does accidentally destroy or damage thesame, then it must reimburse the Landlord for the market value of such items. The Landlord mustnotify the Tenant with evidence of the market value of such items, and any repair costs, by providingquotes or invoices as appropriate without any mark up. The Landlord must give the Tenant reasonabletime to object or find a reasonably cheaper quote.

7.5.2 Unless the Schedule states otherwise, the Tenant is responsible for maintaining the interior ofthe Premises, including any walls, sanitary facilities, kitchen facilities, and air conditioning units, andunless the Schedule states otherwise, radiators and heating facilities. The Landlord acknowledges thatthroughout the Term and any extension thereof, the Premises may become damaged through ordinarywear and tear and will not claim against the Tenant for this.


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7.5.3 If the Schedule so clearly indicates, Tenant shall pay the Landlord a Security Deposit prior tothe Start Date in the amount set out in the Schedule, or if no amount is stated, then the equivalent ofone months Rent. This Security Deposit shall remain the property of the Tenant, and shall be held inan interest-bearing account of the Landlord and may not be used for his own purposes or be pledgedto or held by any lender or creditor, and shall be used only to compensate the Landlord for breaches ofclause 7.3.3, or this clause 7.5, or for the Tenants failure to pay R ent or utilities. After any permitteddeductions, the Security Deposit shall be returned to the Tenant together with any interest accrued onthe day after the End Date, or the date of a valid earlier termination of this Lease

7.5.4 The Tenant is solely responsible for security of its property and the Premises from break-ins,and may engage its own security guards. The details of any security operation and of any codes forany alarms or equivalent that it installs are confidential, and are not required to be provided to theLandlord.

7.5.5 The Tenant agrees to permit the Landlord to inspect the Premises, but no more often than once aevery 2 months and with good cause, and the Tenant agrees to grant the Landlord or his contractorsaccess to the Premises for the purpose of maintenance on at least 14 days notice, except that the notice

period may be shorter in the case of an emergency.

8. Remedies

8.1 Step-in Right

If the Landlord fails to undertake any task required by this Agreement within a reasonable time orwithin a set period of which the Tenant notifies the Landlord (whichever is the shorter), then theTenant may carry out the task and charge the costs back to the Landlord by way of deduction from theRent due, or by exercising any other right of set-off against the Landlord. The Landlord may notobject to the costs incurred by the Tenant in doing so, provided that they are not excessive, and thatthe Tenant produces tax receipts or invoices for any purchases. The Tenant may not mark up or makeany profit on such costs.

The step-in right extends to, but is not limited to, obtaining relevant municipality permits, payingutilities, or carrying out any repairs.

8.2 Termination

8.2.1 Either Party may terminate the Agreement on written notice to the other in the event of:

a. The insolvency of the other Party, or the filing and granting by the court of any bankruptcy

petition against the Party, or if the other Party is unable to pay its debts or a creditor seeksenforcement acts against the other Party;

b. Material breach of this Agreement by the other Party, or a series of cumulative smaller breaches that, taken together, are material. In the case of a remediable breach, the Party not indefault shall give the defaulting Party written notice of the breach and it shall have seven (7)days (or such longer period stated in the notice) to remedy the breach, failing which thisAgreement can be terminated. A Party may terminate immediately for an irremediable material

breach.

Breach of Clauses 5 (regarding warranties) or 6 (regarding duties) by the Landlord shall be consideredmaterial breaches, which entitle the Tenant to terminate this Agreement immediately, except where

the Landlords maintenance failure is a minor one.


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If a Tenant has not paid rent that is due under this Agreement for more than two rent periods, then theLandlord may terminate on at least 7 days written notice. Issues that are fully, specifically and

properly disclosed against the warranties in the Lease are not breaches.

8.2.2 The Tenant may also terminate this Agreement without penalty on at least seven (7) days writtennotice for lack of access or usability of the Premises, in whole or in part, for their intended purpose setout in the Schedule during the lease term, including as a result of a force majeure such as a flood, fire,earthquake or wind (save where any of the foregoing were the result of the Tenants own breaches).

8.3 Damages

Either Party may, in addition to or in the alternative, seek damages from the other for any breaches bythe other of whatever nature under this Agreement. Each Party shall also indemnify the other for anycosts, claims or expenses that the Party must pay third parties as a result of the breach of this Lease bythe indemnifying Party.

Parties under this Agreement shall be liable for direct losses, which include those described in the

previous paragraph and the cost of the Tenant finding alternative accommodation or undertakingrepairs. Neither Party shall, however, be liable for consequential or economic loss suffered by theother Party, such as lost trading profits or losses of third-party contracts.

9. Disputes and Applicable Law

9.1 This Agreement shall be subject to Kosovo law.

9.2 In the event of a dispute under this Agreement, either Party may serve a written notice on the otherParty, referring the dispute to mediation under the auspices of the Alternative Dispute ResolutionCentre at the American Chamber of Commerce in Kosovo or the Permanent Arbitration Tribunal atthe Kosovo Chamber of Commerce in Kosovo (as indicated in the Schedule). The dispute is referredin accordance with the then-applicable Kosovo Mediation Rules used by such Chamber.

9.3 If the dispute is not resolved within thirty (30) days of such notice of referral to mediation beingserved, then the parties shall resolve any dispute or claim relating to the Contract, including as to itstermination or validity, by arbitration under the auspices of the Alternative Disputes ResolutionCentre at the American Chamber of Commerce in Kosovo or the Permanent Arbitration Tribunal atthe Kosovo Chamber of Commerce in Kosovo (as indicated in the Schedule) in accordance with thethen applicable Kosovo Arbitration Rules used by such Chamber.

Unless otherwise stated in the Schedule, the arbitration shall be in Prishtina in the language of this

contract, and there shall be a sole arbitrator.

10. General

10.1 This Lease is executed in the following language [ ]. The version in this language only shall bedefinitive for the purposes of interpretation. Any translations into another language are forinformational purposes only.

10.2 Notices under this Lease must be in writing, and sent to a Party using the details in the Scheduleor any replacement details notified in writing. Notices may be sent by email to the other Party if anemail address is given in the Schedule, provided that a read receipt is given or some other evidenceof receipt is given for example, if the recipient replies. If an email address is not given, then thenotice must be sent by other means, such as post or by hand. Notices of breach or termination or


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exercise of the Right of Extension or referral of a dispute to mediation or arbitration must be given byhand or by registered post, and may not be given solely by email.

10.3 In the event of a conflict between the language or meaning of any part of the body of thisAgreement and any document attached and made part of it, the language or meaning of the main

body of this Agreement shall prevail. The Headings of this Agreement are for ease of referenceonly, and shall not have any significance in interpreting this Agreement.

10.4 The Agreement contains the full understanding of the Parties, sets out a full allocation of risk between them, and constitutes a complete and exclusive statement of the terms and conditions oftheir agreement concerning matters referred to in the Agreement. All prior negotiations, dealings,understandings, and oral or written agreements regarding the Lease of the Premises are nowsuperseded by this Agreement.

10.5 Where there is more than one Landlord, e.g. co-ownership, the Landlords shall be jointly andseverally liable for compliance with or breaches of this Agreement.

10.6 Neither party may assign this Agreement without the others consent, such consent not to beunreasonably withheld or delayed. This clause shall not, however, prevent a Landlord from pledging the receivables of the Rent to a creditor.

10.7 No agreement purporting to amend, modify, vary, explain or supplement the terms or conditionsof the Agreement shall be binding on the Parties, unless and until it is made in writing and signed by

both Parties.

10.8 The waiver by either Party of a breach or default of the Agreement, the waiver of a right orremedy under the Agreement, and any usage of trade or course of dealing or performance, shall notconstitute a continuing waiver of any other breach or default, or a waiver of other rights or remediesor other terms of the Agreement, unless and until the waiver is expressed in writing and signed by

both Parties.

10.9 No third parties shall have any or enforce any rights under this Agreement without the consent ofthe Parties.

10.10 If any provision of the Agreement is held by the arbitrator to be illegal, invalid orunenforceable, the remaining provisions shall remain in full force and effect.

10.11 If the law in the future requires that this Agreement is verified in a court or otherwise notarizedor translated into a specific language, including to perfect any registration, then the Parties agree totake all such steps to ensure this occurs, bearing the costs equally unless the registration is clearlyto the benefit of one party, such as for a loan by that party. This shall also be done on request ofone of the Parties.

Landlord Tenant

Signature Signature: .

Name: _________________________ Name:_________________________(Printed) (Printed)

Date: _________________________ Date: _________________________


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USERS GUIDE TO THE STANDARD FORM FOR COMME RCIAL LEASE CONTRACTS

The users guide to the Standard Form Contract for Commercial Leaes provides explanations to eachclause and sub- section of each clause included in this forms General Terms and Conditions section.The users guide also includes references to Kosovos Property and Tax laws, when applicable.

Explanations and references are intended to provide users with guidance to interpreting clauses inthe General Terms and Conditions section.

Because contractual relationships differ, General Terms and Conditions attached to the Standard Form Contract should be tailored to specific Landlord/Tenant requirements. Neither the Standard Form nor the users guide or legal commentary replace advice and counsel of a qualified attorney specializing in drafting commercial leases.

Recitals

A. The Landlord owns certain land and building(s) with the Cadastral Details noted in theSchedule.

B. The Tenant wishes to lease from the Landlord, and the Landlord wishes to lease to theTenant, the Premises described in the Schedule pursuant to the terms and conditions in thisAgreement or Lease.

The Recitals set out the background to the Contract. They cross-reference details in the Schedule,most importantly the description of the Premises within the Schedule. Ideally, a Plan should beattached that delineates and explains the exact physical scope of the Premises.

1. Special Pre-Conditions

1.1 The Landlord agrees to carr y out the work s/r enovations/adju stments descri bed in the Scheduleon or before the Star t Date or the date specif ied in the Schedule.

1.2 The Party/Par ti es descri bed in the Schedule agree to provide the document(s) descri bed in theSchedule on or before the Star t Date, or the date specif ied in the Schedule.

1.3 I f indicated in the Schedul e, the Tenant agrees to pay the Secur ity Deposi t on or before theStart Date.

1.4 If a Special Pr e-Conditi on(s) is not met by the Landlord, the Tenant may ei ther termi nate thisLease immediately on wri tten notice to the Landlord, wi thout penalty or charge, or the Tenant maycharge the Landlord a penal ty as set out i n the Schedule for each day that the Landlord i s late incomplying.

1.5 I f a Special Pr e-Condi tion is not met by the Tenant, then the Landlor d may termi nate this Leaseon wr i tten notice to the Tenant before the Star t Date, without penal ty or char ge.

Pre-Conditions are items that need to be met or completed before the Lease begins and/or occupationstarts. Pre-Conditions give the Parties certainty about applicable terms, and simultaneously the Partieshave various things which they need to do before the Agreement moves to the next stage, which is theactual beginning of the Lease. The kind of things that might need to be done are:

- Further work or repairs to the Premises by the Landlord, including separate utility meters- Furnishing by the Landlord- Provision of a deposit or documents, such as references by the Tenant- Additional municipal consents


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- Documents from the Landlord, such as evidence of paid utility bills

If these Pre-Conditions are not met by the deadline set in the Schedule, the relevant Party canterminate the Agreement. On the other hand, the Party may proceed by deciding that it does not needthe pre-condition met, or that it can be met after the Lease begins. For example, refurbishment mightoccur after the Tenant has moved in. Clause 1.4 recognizes that the Tenant is in a difficult position,and might prefer to move in, but ensure that the Landlord does what he has promised by allowing theTenant to charge a penalty for the un-renovated property. The amount of this penalty should be set outin the Schedule.

2. Premises

2.1 The Landlord h ereby leases to the Tenant , and the Tenant h ereby leases from the Landlord, thePremises described in the Schedule, together with the right to use any of the Landlordsitems/fur ni tur e listed in the Schedule.

2.2 The Premises incl ude the car parking space(s) and any yard or outside space descri bed in the

Schedule, and un less stated otherwise in th e Schedul e, any appur tenances and the outside wallsand roof where relevant.

Here, the Premises are described in detail to avoid later disputes over its boundaries. As previouslynoted, a Plan should ideally be attached to the Lease that clearly delineates which physical areas are

part of the Lease, and which are not. The extent of the Premises is critical to issues such as repairliabilities, the ability to use outside walls for advertising, outside space for parking, and theinstallation of generators.

3. Term, Extensions and Early Termination

3.1 Term

Subject to other terms in thi s Lease, the Term of the Lease shal l be the per iod that commences onthe Start Date in the Schedule, and expir es on the End D ate in th e Schedul e.

3.2 Ex tension

3.2.1 I f the Schedule indi cates that the Tenant has a Right to Extend, then the Tenant may extendthe Term of the Lease once for the Extension Peri od set out i n th e Schedul e, or i f no period is soindicated, for the same per iod as the in i tial L ease. I f the Tenant wishes to exerci se it s Righ t toExtend, it must give the Landlord at l east sixty (60) days wri tten notice pri or to th e ini tial End D ate,stating the Tenants wish to extend.

3.2.2 I f th e Tenant exercises thi s Right to Extend the Term, all terms and condit ion s of the Leaseshal l r emain as provided herein .

Th is Clause almost enti rely benefi ts the Tenant. L andlords may choose to delete thi s Clause, or thePar ties might al so agree to modif y it. F or example, they might decide that i f the lease is extended,then the rent shall increase in l in e with in fl ation r ates as publi shed by the Central B ank.

3.3 Earl y Termination

Un less the Schedul e indi cates otherwi se, the Tenant may, in it s sole and absolu te discretion, dur ingthe Term terminate thi s Lease at any ti me before the End Date, or the end of any Extension period,without penalty by giving prior written notice to the Landlord of the Tenants intention to


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termi nate. Th e Tenant must give the pri or wr i tten noti ce to the Landl ord at least six ty (60) days, orany other n otice per iod i ndicated in the Schedul e, befor e the in tended termination date.

This Clause gives the Tenant a right to terminate during the term on at least sixty (60) days notice.The Landlord might want to change this Clause by deleting the right to early termination, orincreasing the sixty (60) day requirement to, for example, ninety (90) or one hundred eighty (180)days. The Clause could also be amended to give the Landlord the right to terminate the Lease duringthe term, but this would be quite harsh on the Tenant, who would face uncertainty. To minimize thisuncertainty, the Landlord might maintain a right to early termination, but on ninety (90) days or onehundred eighty (180) days notice.

4. Rent and Payment

4.1 The Tenant shal l pay the Landlord th e Rent set out i n the Schedule dur in g the Term, and anyextension. I n addition to the Rent, the Landlor d may charge VAT i f r equir ed by law, provided thatthe Landl ord provides a copy of h is VAT certif icate and a vali d VAT i nvoice to the Tenant.

Under Article 28.2.2.5 of the VAT Law L-146 - 3, the letting of immoveable property for commercial purposes with the exclusion of land is something for which VAT must be charged if the Landlords business turnover (which might include other activities) exceeds the VAT threshold within a 12month period. However, some subjects, such as embassies, are exempted from this requirement. TheVAT threshold is currently Euro 50,000.

4.2 The Landlord wi ll , if requested by the Tenant, provide the Tenant wi th a vali d tax invoice forthe Rent and any VAT. The invoice shall include the Landlords full name, fiscal number, VATnumber (i f r elevant), date and rent peri od, and shal l i temize the VAT separately.

Although there is no common practice of issuing invoices for rent payments in Kosovo, and the TaxAuthority does not currently routinely require such invoices, there is also no apparent exemption forrent in the VAT Law; therefore to be cautious, the Tenant should reserve the right to require suchinvoices.

4.3 The Tenant shall pay the Rent to the Landlord by making payment into the Landlords bankaccount that is noted in the Schedule, or into any replacement bank account in the Landlordsname that the Landlord notif ies the Tenant of in wri ting at least seven (7) days pri or to th e due datefor the Rent.

Payment into a bank account is good practice, and in the case of payments over Euro 500, these payments are only deductible as tax expenses under the Law on Tax Administration if paid via a bankaccount.

4.4 The Rent shall be paid as set out i n th e Schedule, for example, monthl y, quarter ly or yearl y.

For example, if a Tenant agrees to pay six (6) months rent in advance, then this advance payment can be explained by a note in the Schedule.

4.5 The Rent shal l be paid on the Payment Date for the Rent set out in the Schedule, except f or the first payment, which must be made the day after the Leases signing. If the date this Leasessign in g is not the Payment Date for th e Rent, then the amount of rent due after signatu re butbefore the next agr eed-to Payment Date shal l be pro-r ated to the next Payment Date. Al l paymentsshal l be made in Euros.


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The Parties can agree on a regular rent payment date that suits them both, and insert this date into theSchedule. There is no reason why rent payments cannot be made weekly if the Parties agree. TheSchedule would need to be changed to reflect weekly payments, though.

4.6 I f thi s Lease is val idl y terminated before the End Date or th e end of an Ex tension Per iod, thenthe Rent shall be paid on a pro-r ated basis up to, and including, the date on whi ch the L easetermi nates. Al l advance payments of Rent shal l be refun ded by the Landlord in the amoun t thatcorr esponds to the per iod of t ime after th e terminati on date that the Tenant has given valid wri ttennotice.

4.7 I f the Tenant i s late paying the Rent by more than thr ee (3) days, then the Landlord may byinvoice charge the Tenant i nterest on the late payment f rom the date of l ate payment unti l actualpayment at the average Kosovo bank overdraft rate set out in th e most r ecent Centr al B ank ofKosovo publ icati on pr ior to the date the Rent was due.

As of 1 September 2011, this rate was about 12% per annum. The rate can be found at www.bqk-kos.org/.

For example, if a Tenant failed to pay his quarterly rent of 1,000 Euro on 1 September 2011, then theinterest due on 31 December 2011 would be 12% of the late payment. Applying the applicable rate,determined by dividing by 365 (days) x 1000 Euro = 0.3287 per day * (30+31+30+31), i.e. 1212days= Euro 40.1 total interest due.

4.8 The Rent in dicated in the Schedule is the gross Rent, unless otherwise stated. Th e Tenant shalldeduct any tax withholding r equir ed by law f rom the Rent on behalf of the Landlord, and theTenant shall provide an annual tax withh oldin g certi fi cate to the Landlor d, as r equir ed by law. Taxwithholdings are not deducted f rom the VAT element.

Section 27 of Corporation Tax Law L03/113 requires business Tenants that are legal persons, e.g

LLCs, JSCs, or partnerships, to withhold 10% of the Rent payable to the Landlord, and pay this as taxon behalf of the Landlord to the Kosovo Tax Authority. If the income or corporation tax rates change,this amount may change.

5. Landlords Warranties and Indemnities

I f the Landl ord i s in breach of or wi shes to make a disclosure under any of these warr anti es at or prior to the Leases execution, and the Tenant agrees to accept that breach or disclosed breach andnot claim f or th e breach, this wil l be stated in the Schedule.

The section below contains various warranties from the Landlord. It is possible that the Landlord will

not be able to fulfill all noted requirements, and may instead note any issues relating to the warranties(as opposed to amending the warranties wording). The effect of the Landlords noting or disclosingan issue is to prevent the Tenant from suing and claiming damages under the warranty, because theTenant has become aware of, and decided to accept, the disclosure.

5.1 Ownershi p

The Landlord warr ants that:

5.1.1 I t is the sole and lawfu l owner (or, in the case of f ormer ly social ly-owned property, owner of a99-year l ease) of the Premises, and that th e Landlord i s dul y author ized and able to enter i nto th isLease and perform the obligati ons set out i n th is Lease;


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5.1.2 I t owns and has all r ights to use and enj oy the Premises (including any land underneath thePremises), and is the valid registered owner ( ei ther of ful l ti tle or a 99-year lease) in the relevantKosovo cadastr e;

These warranties are typical of commercial leases in most countries, but are more important informerly-socialist or post-conflict countries in which property disputes are common. Tenants who donot verify the correct owner may have to leave the Premises. While these Clauses would allow theTenant to leave the Premises if the Landlord is later determined to not be the owner, the Tenant mayhave invested substantial sums in the Property, with moving being entirely disruptive to the Tenants

business. Obviously, avoiding this situation is ideal. Therefore, potential Tenants should check theLandlords ownership position prior to signing the Lease by researching recent official cadastralownership documents. If a Landlord is unable to present these, then the Tenant should rightly becautious about signing the Lease.

Its important to remember that, in Kosovo, land can be owned separately from a building, socadastral documents need to be checked for both land and building ownership. If doubts exist as toownership, an experienced property lawyer should be contacted.

Properties acquired through privatization will usually be owned by a 99-year lease, which aside fromthe 99-year length, conveys the same rights and responsibilities that accompany land-ownership (i.e.the property can be mortgaged, sold, etc). In such a case, there is no head-lessor from whom torequest permission to lease the property.

5.1.3 I t wil l pr ovide the Tenant with an up-to-date, stamped possession l ist/cer ti fi cate of ownershipfr om the cadastre for the Premises on the Tenants request, and on the condition that the Tenantpays the cadastr al fees for obtain in g thi s document. Th is document may be requested by the Tenantnot mor e often than once every six (6) months.

The Tenants businesse s may need this document to apply to the business registry, or for other

municipal or business permits, and therefore need to ensure within the Lease that they can obtain thisdocument.

5.2 Vacant Possession and Undistur bed Use


5.2.1 Th e Tenan t may peaceably enjoy vacant possession of the Pr emises throughout the Term,and wi ll be able to use the Premises for the Purpose of Use descri bed in the Schedule for the Term(and any extensions thereof) without any interr uption or distur bance fr om Landlord, or any otherper son claimi ng by, fr om, through, or under the Landlord, or acting as agent of the Landlor d, andwithout the Landlord occupying the Premises, whether via its or others belongings, rubbish orwaste;

It is general practice in commercial leases for the Landlord to give the Tenant full rights to occupy thePremises, without interruption. The Landlord should not enter the Premises, or store his belongingsthere. As commercial leasing is a more recent practice in Kosovo, we have made this obligationexpress.

Again, most laws give the Tenant an implied right of quiet enjoyment, which means that the Tenantshould not be interrupted in any way. This Clause makes this right an express right.

5.2.2 I t knows of no li kely di stur bance from n eighbors, and that none of the activity of theneighbors is likely to distur b the in tended Pur pose of Use descri bed in the Schedule by the Tenant .


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If the Landlord is aware that his neighbors are noisy or likely to disturb the Tenant with works, etc.,the Landlord should make a disclosure, in writing.

5.3 Author ity to En ter in to Lease


5.3.1 I t has ful l r ight, power , and authori ty, under appli cable laws, ru les, and regulations in eff ectin K osovo and the mun icipal ity where the Premises are si tuated, to execute and deliver thi s Lease,and perform all of the Landlords obligations in the Agreement during the Term of the Lease,in cluding any extensions to the Term; and

5.3.2 I ts execution of th is Lease and the exerci se of the rights and obli gations by the Landlor dunder thi s Agr eement do not constitu te, and wil l not resul t in , any breach of any other agreementthat th e Landlor d has entered into.

If the Landlord is not actually the owner of the property (or the owner of the 99-year social property

lease), he would need to disclose that fact and amend Clause 5.1 to explain that the Lease is a sub-lease. However, the Landlord may need to obtain permission to sub-lease the Premises from the head-lessor, as most head-lessors do not permit sub-leasing. This Clause seeks to protect the Tenant whoneeds to be sure that it will not be removed because the Landlord was not truly in a position to leasethe Premises.

Similarly, if the mortgage holder prohibits leasing or requ ires the mortgagors consent to the Lease,then this Clause puts the obligation on the Landlord to make sure that consent is obtained. Again,

potential Tenants should check the mortgages terms, as the bank can potentially later remove theTenant if it decides to sell the property to enforce the mortgage. Except where enforcement isunderway, or unless the rent is significantly less than the mortgage rate, most banks will not refuse agood Tenant, as they are happy for their bank client (i.e. the Landlord) to be receiving an income.

5.4 Compliance with the Law, Regul ations and Lender Requi rements

The Landlord warr ants that:

5.4.1 The Premises comply with al l appli cable laws, rul es and regulati ons of al l publ ic authori ti esin r elati on to the Pur pose of Use set out i n th e Schedul e, inclu ding that the Premises meet allbuil ding r egulations relating to standards and quali ty of bui ld, including seismic regulations, andthe Premises are safe, secur e and fi t f or the Pur pose of Use set out in the Schedule;

Many Premises in Kosovo are non-compliant with building laws or regulations. The consequences ofthis non-compliance vary, and according to the severity of the non-compliance. The absence of a

building permit puts the Premises at risk of demolition, and the Tenant at risk of eviction andultimately business disruption (see Clause 5.4.2). Non-compliance with standard building codes,which have safety implications, may lead to an order to cease public use until the problem or safetyrisk is cured; this cease order could also stop the Tenant from carrying out its business. This warrantyis therefore important, as it gives the Tenant power to terminate the Lease and move elsewhere if theLandlord misleads the Tenant regarding permit statues, or to require the Landlord to fix the problem.

If the Premises do not comply with building regulations, the Parties need to agree to a solution, andrecord what should be done, in writing, within the Lease. Will the Landlord or Tenant make sure thatthe building is compliant, and within a set period of time, and at whose cost? Or will both Partiesaccept the risk, with the Tenant later deciding what to do if a problem arises?

This Clause refers to the Purpose of Use, which should be described in the Schedule and reflects the Tenants intended business. For example, a Tenant may be using the Premises for retail,


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restaurant, offices or industrial use. Each of these intended uses will have differentrequirements, and commercial use of a building requires higher permit payments and more permitsthan, for example, residential use.

5.4.2 Th e Premises have a buil ding permit that cover s the fu l l extent of the bui ld of the Premises,and th e Premises have received the technical acceptance cer ti fi cate and permi t f or use, and an yother necessary cert if icates for the intended Purpose of Use, fr om the mun ici pali ty. Fu r ther, thePremises ful ly comply with th ese and the buil ding permi t, and other cer ti fi cate fees have been f ul lypaid. Upon request, the Landlord wil l provide the Tenant on with a copy of the building permi t,technical acceptance, and any other relevant permi ts, and evidence of payment of the r elated f ees;

If the Premises do not have a building permit, this Clause should be changed to oblige the Landlord toapply for and pay for the requisite permits within a specified period of time. If not, the Tenant risksdisruption of the Premises use, including through demolition, by the municipality. The Tenant mayalso have problems with utilities being connected; and even if such utilities are connected, they mightlater be disconnected.

Various building permits are required throughout construction efforts in Kosovo, from initial building permits to technical acceptance permits that must be obtained before the building can be added to the property register. And even if a permit exists, permit fees that remain outstanding can cause problems.A cautious Tenant should check up on the status of necessary permits and fee payments, and aconscientious Landlord will not refuse to divulge such important information.

5.4.3 There is no reason r elated to the Premises as to why th e Tenant wil l not be able to obtain abusiness or mun icipal permi t for the Premises that i s r equi red for th e intended Purpose of Usedescri bed by the Tenant i n the Schedule;

The nature of the construction or the building permit obtained, such as residential as opposed tocommercial, may prevent the Tenant from later applying for necessary permits to operate a building

as a restaurant, education venue, for retail, or as a hotel, etc. This Clause ensures that the Landlordadvises a Tenant of any reasons that would prevent it from obtaining the permits required for itsoperations.

5.4.4 Al l consents, approvals, li censes, and author izations required of any governmental author itynecessary for the Landlords execution, delivery, and performance of this Lease have beenobtain ed, and are in fu ll force and eff ect;

This Clause reflects, again, the construction and permitting requirements.

5.4.5 There is no reason why a municipal permi t for a generator to be install ed in or n ear the Premises, or permits for the Tenants usual signage on the Premises consistent with the Purpose ofUse by the Tenant, will not be obtained fr om the municipality;

5.4.6 There is no mor tgage, tax l ien or other l ien on th e Premises, other than that disclosed inwri ting to th e Tenant , and that any mor tgage holder has consented to the Lease.

As described under Clause 5.3.2 above, most banks and mortgage companies may require theLandlord to obtain consent for or disclose the details of any tenancy, but will not usually refuseconsent. Still, it is important for the Tenant to be aware of any mortgage, because the bank mightrepossess the property if the Landlord fails to keep up payments. Particularly, a Tenant would notwant to enter into a Lease if possession/enforcement proceedings are current and ongoing.

5.5 Uti li ties and Mu nicipality Proper ty Tax

The Landlord warr ants:


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5.5.1 There are no unpaid bi ll s or debts relati ng to electri city, water , rubbish, distr ict heatin g,telecom, internet (utilities) for the Premises, and no disputes with the utilities companies relatingto the Pr emises;

It is important to research whether there are unpaid utility bills or disputes related to the Premises, asthis might make it difficult for the Tenant to obtain utilities for its business, even if the bills or debtsare in the Landlords name. A conscientious Landlord should produce evidence that bills are paid.Payment should not be proven by just the last bill, but by a payment history statement, which KEK,water and district heating companies will produce.

5.5.2 The Premises has it s own separate uti li ties connections, or there i s no reason why suchconnections wil l n ot be obtained, and why in ternet or telecom or other connections wil l n ot bepossible;

Very often, buildings in Kosovo will have been divided. A Tenant will not usually want to shareutility connections, as this will lead to disputes with other occupants over who has usage. To address

this issue, this Clause ensures that there is a separate utility arrangement, or that one can be created. Ifutilities connections must be independent, this independence could be made a Pre-Condition of theLease.

5.5.3 There are no unpaid muni cipality prope rty tax bills, and the Landlord itself or the Landlordsbusiness has no tax or other debts that coul d aff ect the Premises.

If the Landlord has unpaid municipal property tax bills, the municipality may impose a charge or lienon the Premises, and may later sell the Premises at auction to recover its debt. This would prejudicethe Tenant, as its occupation would be affected (particularly if the Lease is not registered in thecadastre against the Landlords title).

5.6 Disputes Regarding Use, Ownership and Re-development

The Landlord warr ants:

5.6.1 I t has not received (itself or via anyone else) notice of any f ormal or i nf ormal claims ordisputes r elatin g to the Premises, including claims of ownership or access r igh ts by a thi rd par ty;

If the Landlord has received such notices, they should be described here and attached to the Lease, sothat the Tenant can make a sound decision as to whether to proceed with the Lease.

Because of this Clause, a Landlord should declare whether there is, for example, a claim filed at theHousing Property Commission, even if the Landlord thinks the claim is not valid or important; theTenant can then form its own opinion. Anything disclosed by the Landlord in this way, and approvedin the Lease by the Tenant, will not create a breach by the Landlord. Through this clause, the Partiescan also decide who will pay any compensation in the case of a breach of this warranty, or whetherthe Tenant may be compensated up to a specified sum if the breach occurs.

5.6.2 I t has not r eceived any noti ce of expropri ation or in tenti on to r edevelop f rom the municipalityor any other publi c body in Kosovo, and is not aware of any i ntenti on to r e-develop the Premises orlocations near the Premises;

This Clause addresses any notices to expropriate land to build or extend roads or other properties onor near the Premises, and ensures the Tenant that no such notices or plans are known to the Landlord.


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5.6.3 It has not received any notice of non-compli ance with construction permi ts, use permits,muni cipality, laws or buil ding r egulations, and no envir onmental notice, and is not aware of anypendi ng proceedings or of any inf r ingement due to any such non-compliance.

This Clause partially relates to Clauses 5.4.1 and 5.4.2, but goes further in requiring that the Landlordnot only confirm that he is compliant with Regulations and declare any non-compliance, but also stateif he has received any notices that would reveal whether circumstances are more urgent, and thereforemore risky for the Tenant.

6. Landlords Duties

6.1 Deli very of the Pr emises

The Landlord shall cause the Premises to be vacated and deliver the Premises to Tenant in a properstate and condition for the Purpose of Use, so that the Tenant can move in by the Start Date.

6.2 Repairi ng and M aintai ning the Premises

6.2.1 Unl ess other r epair and maintenance ar rangements are set out in detail in the Schedule, theLandlord shall be r esponsible at i ts own cost f or undertakin g prompt r emedial repair s andpreventati ve maintenance of the structure, so that th e Premises remain fi t f or the Purpose of Use.The structur e shall in clude the roof, outside walls, plumbing, and guttering, and un less theSchedule states otherwi se, electr ics, heating and radiator s, but shal l exclude any in teri or par ts ofthe Business Premises that are not str uctur al, such as interi or f loors, interi or wal ls, and sani taryfacil iti es. The L andlord shall so far as possible arr ange repair and maintenance in a way thatcauses the minimum disruption to the Tenants business; for example, repair s and maintenanceshoul d be conducted outside of business/off ice hour s, and the Landlor d shal l gi ve the Tenant atleast 14 days advance wri tten not ice of such, except in an emergency.

The Parties may change this Templates mai ntenance arrangements on the Schedule, and place theobligation of, for example, heating or radiator maintenance on the Tenant. In some leases, particularlyshort-term leases, the Landlord might be willing to take on more maintenance obligations, in whichcase this Clause would also need to be changed via the Schedule.

6.2.2 I f any plumbi ng or electri cal r epair s ari se fr om the misuse or u se of the Tenant, such asblockages caused by or via the Tenant, or if the need for repairs arises from the Tenantsinstall ations, the L andlor d may charge the Tenant a reasonable amount f or th e costs of suchrepair s. The Landlor d must present evidence to the Tenant of the costs, including vali d tax invoicesfor its purchases; the Landl ord may not charge any mark -up or make any profi t on th is activity.

6.3 Recording of L ong-term Lease in Cadastre, Noti fi cation of M ortgage H older s

The Landlord shall:

6.3.1 I f the Tenant r equests, record or register the exi stence of thi s Lease as an encumbranceagainst the relevant parcel number in the cadastr e. The Tenant shal l pay the cadastr al f ees for suchregistration;

Registration of the Lease in the cadastre against the parcel number of the Property is permitted underthe Law on Property. However, registration is typically only worthwhile for a long-term lease, forexample, a lease for more than five (5) years, or for a very valuable lease for which rent and Tenant

investment is high. The aim of the registration is to make sure that any mortgage companies, lendersor persons seizing the property are on notice of the Lease and cannot evict the Tenant.


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6.3.2 Noti fy any lender or h older of any mortgage over the property of the exi stence of th isAgr eement and any extension of the Term and shal l obtai n consent fr om the lender or mor tgagehol der where appropri ate to the Lease.

Many modern loan agreements that have a mortgage security will require the borrower to notify the bank of the existence of a Lease, and sometimes to require the Landlord to obtain consent to lease thePremises. If the Tenant is a good Tenant and the rent is reasonable and reflects market rates (with aright to increase after a reasonable period), the bank will likely not object to the Lease. Banks mayobject, on the other hand, if they feel that the Premises are being rented out too cheaply or on a long,cheap lease that may make it difficult for the bank to realize its collateral in the event of a default, orwhich may make it difficult for a Landlord to repay the loan.

6.4 Util iti es

Unless the Schedule indicates that the Landlord is responsible for any relevant utilities and they areincluded in the Rent, the Landlord shall:

6.4.1 Ensure the relevant uti li ties bill s for uti li ties requir ed by the Tenant ar e transferr ed to theTenants business name without delay an d with zero debts, or the Landlor d shal l take all measur esto facilitate a separate utility connection for the Tenant in the Landlords name if the Premises arepart of a larger bui lding with a sin gle uti li ty connection;

6.4.2 Provide the Tenant wi th good access to all relevant uti l ity meters, forwar d to the Tenant anycopies of bi ll s or of any corr espondence received from the util it ies immediately and without delay,and permit the Tenant to make any necessary connections and installations, including fortelephone, in ternet, cable TV, satelli te or otherwi se.

This Lease assumes that the Tenant pays all utility costs based on the actual recorded usage. If the

Rent is to be an inclusive price, this Clause would need to be changed. This change can beachieved, for example, by a clear note in the schedule that states the arrangement and mentions thatthis Clause has been changed.

6.5 Notifi cations of Disputes or Claims or F ormal L egal Noti ces

The Landlord shall:

6.5.1 Immediately f orward to, or notif y the Tenant i n wr iti ng of any notices, post, claims or otherissues that the Landlor d receives (including noti ces or cl aims under Clause 5), or of whi ch the

Landlord becomes aware that may affect the Tenants full use of the Premises for the Purpose ofUse, or t he Tenants rights under this Agreement; such notices include those from publicauthori ties or neighbors regardi ng developments;

This Clause is designed to give the Tenant advance warning of events that might affect the Tenantfinancially, such as expropriation, demolition, utility disconnection, or a property ownership dispute.If the Tenant learns of these events quickly enough, it can make a decision on whether to invest in orrenew the lease.

6.5.2 Promptly f il e noti ces of objection to, or enf orce the r ights related to, the Premises with thi rdparti es or publi c author it ies when requested by and appropr iate for the Tenant; examples in cluder igh ts to access the property, or the r ight to obj ect to development i n th e vicini ty of the Premises,and the r ight to object to development in the vicini ty of the Premises.


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This Clause places an important obligation on the Landlord to minimize damage to the Tenant. It alsomakes clear where the obligation to respond lies, so that there is no confusion about what theLandlord should do and what the Tenant should do.

6.6 Evidence of Compli ance

The Tenant may at any time, and on r equest, immediately r equi re the Landl ord to pr ovide evidenceof compli ance with any of th e warr anties in Clause 5, or any of the obli gations in th is Clause 6.

As discussed, the Tenant should conduct compliance verification before the Lease is entered into.Still, this Clause gives the Tenant the right to compliance checks during the Lease, and this

particularly applies to ongoing obligations, such as those in Clause 6.6.

6.7 Leasing to Competi tor s of the Tenant

Un less the Schedule states otherwi se, i f the Premises form par t of a l arger bui lding or group ofbuil dings in the vicin ity of the Premises, to the extent that the Landlord now or in the futu re owns

any such bui ldings or par t th ereof i n the vicini ty, inclu ding n ext to or above or below the Premises,the Landlord agrees not to l et or sub-l ease any such adj acent bui ldings or par t thereof to any otherTenant that competes in terms of business with th e Tenant.

This Clause is Tenant-friendly. This restrictive Clause maintains the value of the real estate lease tothe Tenant, which is often dependent upon location and the resulting ability to exclusively attractcustomers. However, this type of clause is only generally appropriate if the Tenant is a major client ofthe Landlord, such as a bank or insurance company. Otherwise, a Landlord might want to delete it, asit creates quite an onerous obligation.

A Tenant in a strong negotiating position might, in certain circumstances, want to expand such ananti-competition Clause to prohibit Tenants in next door blocks from advertising for competitors. For

example, an insurance company might want to ensure that there is no competing sign right next to its business.

7. Tenants Warranties Rights and Responsibilities

7.1 Author ity to En ter in to Lease

The Tenant war rants that:

7.1.1 I t has ful l ri ght, power , and authori ty under appli cable laws, rul es, and regulations in eff ect

in Kosovo and the muni cipali ty in whi ch the Premises are situated to execute and deli ver thi sLease, and to perform i ts obli gations dur ing the Term of the Lease or any extensions of the Term;and

7.1.2 I ts execution of th is Lease and the exerci se of th e ri ghts and obli gations by the Landl ordunder thi s Agr eement do not constitu te, and wil l not resul t in , any breach of any other agreementthat the Tenant has entered into.

This Clause is the corollary of the Landlords warranties, which are expressed in Clauses 5 and 6. TheLandlord should not let a Tenant operate an illegal business, or without relevant consent, as it mayaffect the stability of the Tenants revenue stream, or result in municipality action that devalues the

property.


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Similarly, the Landlord should make sure that the Tenants Lease will not be struck down because theTenant has exceeded its powers under the Lease.

7.2 Uti li ties, Mu nicipality Property Tax and In sur ance

7.2.1 The Tenant shall be solely r esponsibl e for and agrees to under take the prompt payment of allcharges for uti l iti es used by the Tenant dur ing the Term i n the Premises, incl uding telephone cal ls,intern et, heating, li ghti ng, fu el, electr ici ty, rubbish col lection , water and sewerage, provided suchchar ges are separately metered or separately accounted for.

This Lease assumes that the Tenant pays utilities. If an inclusive lease, in which the Landlord paysthese costs, is desired, this and Clauses 6.2.1, 6.4 and 7.2.1 would need to be changed by an indicationin the Schedule.

7.2.2 Unl ess the Schedule states that the Landl ord i s responsibl e, the Tenant shal l promptl y pay the

muni cipal property tax, eith er by bil ls fr om the Landlor d, or i f the Tenant so requir es, by dir ectbills in the Tenants own name.

Under the Law on Municipality Property Tax, the owner of the Premises is liable to pay the tax, but ifthe owner is not easily identified, the Tenant pays. The Parties are able to change the default situation,so that the Tenant pays (or reimburses the Landlord, in addition to paying rent) by a provision withinthe Lease.

7.2.3 The Tenant may (but shall have no obligation to) take out any in sur ance in relation to its own property, the Landlords property, or the Premises.

As a general rule, a person can only insure his own property. Otherwise, when an insurance claim is

made, the insurer will not pay, as the claimant has not technically suffered a loss because the property belongs to another who ultimately suffers the loss. This Clause clarifies that the Tenant has noobligation to take out insurance against problems such as theft or flood damage to the property, whichmight damage the Tenants stock or contents.

7.3 Use of the Pr emises, Alterations

7.3.1 The Tenant may use the Premises only f or the Purpose of Use descri bed in the Schedule. I fthe Tenant wi shes to change the Pur pose of Use, it must obtain wr it ten consent f rom the Landlor d,and such consent must not be unreasonably wi thh eld or delayed.

7.3.2 Unl ess the Schedule or the Plan in dicates otherwise, the Tenant may use the outside of thePremises, includin g but not li mi ted to attachin g signs on the outside of the Premises, or park in gcars, generators, furniture or other items, and provided that the Tenant obtains the relevantpermi ssions requir ed by law. The Tenant may also apply f or permits for u se of the muni cipality orother land in the vicini ty without notif ying the Landlord.

7.3.3 Th e Tenant may make intern al and li mited external alterati ons to the Premises, unl essotherwi se stated in the Schedul e. I ntern al alterations may in clude destr oying non -load-beari ngwall s, or putting in fl oorin g or a kit chen and sanitar y facili ties, provided that any demoli tion oralteration does not af fect the stabil ity of or value of the Premises, and provided that all alterati onscomply with buil ding r egulations and appli cable law. The Tenant shall provide the Landlor d withevidence of compl iance when appropr iate. F ur ther , unless otherwi se stated in the Schedul e, theTenant may provided it compli es with the law and r egulations attach or in stall signs and airconditioning units, cables and pipes, security alarms, fire prevention equipment, heating andcooling systems, and i f necessary, satell ite or r adio r eceiver equipment onto or withi n the Premises.


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The Tenant shal l , however , ensur e that at the end of the Term or any extension, th e Premises areretur ned to a simil ar condi tion (al though subject to wear and tear) as exi sted on the Star t Date ofthe Lease.

This Clause assumes that the Tenant is in a long-term Lease. In the case of a long-term Lease, it isnormal to permit a commercial Tenant to make the alterations described in the clause. However, toavoid disputes over the condition of the Premises, the Parties should jointly document a description ofand photograph the state of the Premises before signing the Lease, and at the end of the Lease. TheTenant must reinstate the building to the same condition, or pay for any damages.

7.4 Sub-Leasin g

Un less the Schedule states otherwi se, the Tenant may sub-l ease all or part of the Pr emises by givingwri tten notice to the Landlor d with th e sub- lessees details, and the details of any sub -leasearr angement. I f sub-leasin g is permitted and occur s, the Tenant shall sti ll be responsible forcompli ance with thi s Lease, in cluding both with r egard to Rent payment and l iabil ity f or th e actionsor i nacti ons of the sub-lessee.

Sub-leasing gives the Tenant more flexibility and comfort if it enters into a long-term lease, because ifits circumstances change during the Lease term, it can find someone else to take on the Lease. While aLandlord may wish to prohibit sub-leasing, doing so may make the Tenant more likely to sign ashorter-term lease, leaving the Landlord at risk of periods without income between leases.

7.5 Maintenance and Securi ty, I ncluding Securi ty Deposit

7.5.1 Save as foreseen in Clause 7.3.3 above, the Tenan t may not destr oy or damage the Premises,or an y items of th e Landlord th at are li sted in the Schedule. I f the Tenant does accidental ly destroyor damage the same, then it must reimburse the Landlor d for the market value of such items. TheLandlord must noti fy the Tenant wi th evidence of the mar ket value of such items, and any repair

costs, by providing quotes or i nvoices as appropr iate without an y mark u p. The Landl ord must givethe Tenant reasonable time to object or f ind a r easonably cheaper quote.

7.5.2 Un less the Schedul e states otherwise, the Tenant i s responsible for maintai ni ng the in ter ior ofthe Premises, includin g any wall s, sanitar y facil iti es, ki tchen f acili ties, and air conditioni ng un its,and unless the Schedule states otherwise, radiators and heating facilities. The Landlordacknowledges that th roughout the Term and any extension thereof, the Premises may becomedamaged through ordi nary wear and tear and will not claim against the Tenant for thi s.

7.5.3 I f the Schedul e so clear ly indicates, Tenant shal l pay the Landl ord a Secur i ty Deposit pr ior tothe Star t Date in the amount set out i n th e Schedule, or i f no amount i s stated, then the equivalentof one months Rent. This Security Deposit shall remain the property of the Tenant, and shall beheld in an interest-bearing account of the Landlord and may not be used for hi s own pur poses orbe pledged to or held by any lender or creditor , and shal l be used only to compensate the Landlord

for breaches of clause 7.3.3, or this clause 7.5, or for the Tenants failure to pay Rent or utilities.Af ter any permitted deductions, the Secur i ty Deposit shal l be retur ned to the Tenant together withany in terest accrued on the day after the End Date, or the date of a vali d ear li er termination of th isLease.

Security deposits are uncommon in Kosovo. In other countries, they are more frequent, as Landlordswish to protect their property from damage. However, there is a risk that a Landlord will not returnthe deposit, or will spend it during the Term. This risk could be reduced by the Tenant off-setting thelast months rent against the deposit. Obviously, it is in the Landlords, and not the Tenants, i nterestto have such a deposit. Another option would be to have a bank guarantee, which could be cashed in

by the Landlord, but bank charges for maintaining the guarantee would accrue.


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7.5.4 The Tenant i s solely r esponsible for secur ity of i ts proper ty and th e Premises from break-i ns,and may engage i ts own secur ity guards. The detail s of any secur i ty operation and of any codes forany alarms or equivalent that it i nstalls are conf identi al, and are not requi red to be provided to theLandlord.

7.5.5 Th e Tenant agr ees to permi t the Landlord to i nspect the Premises, but no more often thanonce a every 2 months and wi th good cause, and the Tenant agr ees to grant th e Landl ord or hi scontractor s access to the Premises for the pur pose of mai ntenance on at least 14 days notice, exceptthat the noti ce period may be shor ter i n the case of an emergency.

8. Remedies

8.1 Step-in Right

I f the Landlord f ail s to undertake any task r equir ed by this Agreement wi thin a r easonable time orwith in a set per iod of which the Tenant notif ies the Landl ord (whi chever is the shorter), th en th e

Tenant may carr y out the task and char ge the costs back to the Landlor d by way of deduction f romthe Rent due, or by exercisin g any other ri ght of set-off again st the Landlor d. The Landlord maynot object to the costs incur red by the Tenant in doing so, provided that they are not excessive, andthat the Tenant produces tax r eceipts or i nvoices for any purchases. The Tenant may not mark upor make any profi t on such costs.

This step-in right extends to, but is not limited to, obtaining relevant municipality permits, payingutilities, or carrying out any repairs.

This powerful but practical Clause ensures that a Tenant does not suffer irrecoverable loss from theLandlords delay in making repa irs.

8.2 Termination

8.2.1 Ei ther Par ty may termi nate the Agr eement on wri tten noti ce to the other i n th e event of :

a. The insolvency of the other Party, or the filing and granting by the court of an