Do you want to rent an apartment? Polish law allows you to do so in three ways – under general terms (ordinary lease), under the terms of an occasional lease, and under the terms of an institutional lease. How do these types of leases differ from each other? And is it worth looking for an apartment under institutional leasing?
What is an ordinary lease?
The general rules of leasing are defined in Article 659 § 1 of the Civil Code. According to its provisions, the lessor gives the lessee the use of a specified premises, and the lessee agrees to pay the agreed rent.
Ordinary lease (also called classic) can be concluded for both a fixed and indefinite period, and parties can be private individuals, companies, or entrepreneurs. The purpose of the premises is not defined either—it can be residential or for business activities. The provisions of the Civil Code are supplemented by the Act on the Protection of Tenants’ Rights, Municipal Housing Resources, and Amendments to the Civil Code. This act, among other things, defines the eviction procedure if the tenant does not pay rent. In such a case, the landlord can terminate the lease, but only after a 3-month delay in payment, and a month’s notice period is required. Additionally, during the protection period (from November 1 to March 31), no one can be evicted (even with a court eviction order) if they do not have a replacement premises.
Institutional and occasional leases – protecting the landlord’s rights
The provisions of the ordinary lease are extremely favorable to tenants, but they do not protect the interests of the landlord – the owner of the apartment. Therefore, in 2010, the occasional lease was introduced into the Act on the Protection of Tenants’ Rights, Municipal Housing Resources, and Amendments to the Civil Code, and in 2017 – the institutional lease.
How do occasional and institutional leases differ from ordinary leases?
- Occasional and institutional leases apply only when the tenant is a private individual renting premises for their own residential needs.
- The lease agreement for occasional and institutional leasing must include a declaration in the form of a notarial deed that the tenant will voluntarily vacate the premises upon expiration or termination of the agreement.
- Upon the expiration or termination of the lease agreement for occasional and institutional leasing, the landlord can immediately deliver a written demand for the tenant to vacate the premises and begin eviction if the tenant has not voluntarily left.
Do institutional and occasional leases have any benefits for you as a landlord? Definitely.
Both institutional and occasional leases must be in written form under the threat of nullity. (An ordinary lease allows oral form if the rental period does not exceed one year). This lets you know exactly on what terms you are renting the apartment, and if the landlord does not fulfill their obligations, you can refer to the terms of the agreement.
Institutional versus occasional lease – what are the differences?
Although institutional and occasional leasing are alternatives to ordinary leasing, there are significant differences between them – for both the landlord and the tenant.
Who can rent an apartment
- An apartment under an occasional lease agreement can only be rented by private individuals who do not conduct any business activity or whose business activity is not related to renting apartments. However, institutional leasing is offered exclusively by economic entities engaged in the business of renting residential premises. These can be companies or sole proprietorships, provided that they are involved in the business of renting apartments.
Agreement and formalities
- Both in the case of occasional and institutional leasing, you must sign the agreement in the presence of a notary. This is related to the landlord’s declaration of voluntary enforcement within the time specified in the eviction demand. However, in the case of an occasional lease, you must additionally specify a replacement premises where you will reside after the eviction and include the written consent of the owner of the specified premises that they agree to take you in after a possible eviction. This requirement does not exist in the case of institutional leasing. The landlord only declares that they will voluntarily leave the premises, and in the absence of a place where they could live, they do not have the right to a replacement or temporary premises granted under Article 777 § 1 points 4 – 6 of the Civil Code.
Duration of the agreement
- You can sign an occasional lease agreement for a period not exceeding 10 years. After this period, you can potentially sign another agreement for another period. In the case of institutional leasing, you can enter into an agreement for any period. Most often, companies renting apartments sign a contract for a year. But institutional leasing is possible immediately for 20, 30 (or even more) years. Such long lease agreements usually pertain to institutional leasing with an option to own, where the tenant becomes the owner of the premises after the lease period with an entry in the land register.
Eviction procedure
- In the case of an occasional lease, the tenant’s term to vacate the premises cannot be shorter than 7 days from the day the demand is delivered by the landlord. In institutional leasing, the term to vacate cannot be shorter than 14 days from the day the demand is delivered. It is worth noting that in the case of institutional leasing, the landlord can rely exclusively on the reasons stated in the demand. If the tenant disputes these reasons, the landlord cannot rely on additional reasons, even if they are justified. A condition for quick eviction in the case of occasional leasing is also the registration of the lease with the Tax Office. If the landlord does not do this, they are subject to the eviction procedure as with an ordinary lease agreement. Remember, as a tenant renting an apartment, you have the right to demand from the landlord confirmation that they have reported the signing of the occasional lease agreement to the Tax Office.
Deposit amount and return
- In both institutional and occasional leasing, the landlord may condition the signing of the agreement on the payment of a deposit in the amount of:
- For occasional leasing – no more than six times the monthly rent for the rented premises according to the rate valid on the day the lease agreement is signed.
- For institutional leasing – no more than three times the monthly rent for the rented premises according to the rate valid on the day the lease agreement is signed.
Deposit refund
- The landlord must return the deposit within a month from the day the tenant vacates the premises. In occasional leasing, only at this point can the landlord deduct from the deposit any damages caused in the apartment by the tenant, costs of enforcement, or overdue payments. In the case of institutional leasing, the landlord can still collect overdue payments from the deposit during the lease period, but they must later replenish it.
Occasional versus institutional leasing – a comparison in a nutshell
| Occasional Lease | Institutional Lease | |
| Parties to the agreement | Private individual – private individual | Company – private individual |
| Type of rented premises | Residential premises | |
| Duration of the agreement | Maximum 10 years | No limit |
| Costs of signing the agreement | Notarial fee for the declaration of voluntary enforcement | |
| Deposit | Maximum six times the rent | Maximum three times the rent |
| Declaration to the agreement | Declaration of voluntary enforcement with indication of a replacement premises. |
Declaration of voluntary enforcement without indication of a replacement premises. |
Institutional versus occasional leasing – which to choose?
For those wanting to rent out their apartment, the choice is obvious – if they do not conduct business in the field of renting apartments, they must use occasional leasing. What should individuals looking for a rental apartment choose? Institutional leasing is a solution for those who want to rent an apartment for a longer period and want to ensure that the landlord has experience in managing leases. Regardless of the type of lease you choose, always carefully review the contents of the agreement.
