Possible businessmen’s errors at the conclusion of the lease agreement in Bishkek (Kyrgyzstan)

(Some practical recommendations)

Business in Kyrgyzstan today - it's a constant struggle for survival. Unfortunately, the state does not yet understand the importance role of small and medium enterprises for the economy, society and the country as a whole. In this article, we will attempt to warn employers against possible inconveniences and losses. One of the most common types of contracts entered into by the owner - a contract to lease a building or structure. In the business practice, increasingly, this agreement is in respect of non-residential premises commercial type.

According to article #589 of The Civil Code of the Kyrgyz Republic there is a lease situation where the landlord shall provide the tenant for payment for temporary use of the space. Here, the legislator establishes a number of mandatory conditions of such agreement. The first is a written form, as well as state registration. The law also stipulates the obligatory indication of the parties’ terms of the amount of rent.

However, not always, the entrepreneurs - compliance to such a contract. Often, the most common mistake is the reluctance of employers to register the tenancy agreement in the State Register Office[1]. And although in the absence of registration of the contract does not provide for any penalties, the absence of this condition is dangerous and carries few risks.

For example, self-employed and the mall concluded (signed) lease, the main object of which is to provide entrepreneurs in rent, located in a shopping center for a period of five years.

This contract is a clear term of the contract. Thus, in accordance with Paragraph 1 of Article #180 of The Civil Code of the Kyrgyz Republic, founded that any real estate transactions are subject to state registration. That is, the tenancy agreement must register with the state.

Moreover, pursuant to paragraph 7 of Article #4 of the Law "On state registration of rights to immovable property and transactions with it" by December 22, 1998 the right to lease the premises for a period of three years or more shall be registered in The State Register office. In our case, the lease has been signed for a period of more than three years - 5 years.

Although a clear definition of who should bear the agreement and register , the law does not stipulate such a duty on the current business practice should be based on the landlord , in this case - the mall. Under article 7 of the law he must do within 30 days. And find out if the entrepreneur can register by simple written request to the State Register.

In our example, the state registration body would report that the contract between the entrepreneur and the shopping center was not legally registered in the prescribed manner. Therefore, this contract was concluded without state registration, which means the inconsistency of its legal requirements, since according to the norm of Article #185 of the Civil Code of the Kyrgyz Republic - a transaction that does not meet the requirements of the law is void.

Consequently, these conditions can seriously affect the state of affairs of both parties to the contract, since the entire payment for the rent , deposits other payments arising from the contract - are invalid. In accordance with Part 2 of Article #184 of the Civil Code of the Kyrgyz Republic, with the invalidity of the transaction, each party shall return to the other all received under the transaction , and in failing to return the received in-kind (including when obtained is expressed in the use of property , labor or service) - to reimburse its value in money , unless other consequences of the invalidity of the transaction were not provided for by law.

It is important to remember that if the landlord (shopping center) continues to receive payment and deposit, then his actions can be brought to criminal offenses - fraud (Article #166 of The Criminal Code of the Kyrgyz Republic). By doing so, by the shopping center, a private entrepreneur has a legal opportunity to apply to the Financial Police of the Kyrgyz Republic, to defend their rights.

Another no less important condition premises lease agreement - agreement of the parties with respect to the payment of rent. Article #592 of the Civil Code of the Kyrgyz Republic clearly stipulates that in the absence of agreed by the parties in writing terms of the amount of rent lease a building or structure is not concluded.

In the current business practice often not parties to the agreement specifically and clearly prescribed payment calculations. In this situation between an entrepreneur and a shopping center may be difficult to argue.

To avoid such troubles, and successfully run a business on the leased territory, strongly recommend entrepreneurs to treat responsibly concluded lease contracts, as they have a number of specific conditions. Do not forget that extra few hours spent on efforts to conclude a lease in accordance with the requirements of the legislation could seriously improve your business.

We attend you good luck!

Bishkek Entrepreneur

[1]  Administration on land tenure and registration of rights to immovable property, city of Bishkek