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New law will bring changes to rental agreements

New rules have been adopted that apply to rental/tenancy relationships and which will surely bring about many disputes in the future. The enacted amendments do not change the existing agreements so the new rules will have to be carefully checked when you will be signing a new agreement.

  1. So far the law prohibited demanding a contractual penalty (in Estonian "leppetrahv") from the tenant but now this changes. The landlord can demand a contractual penalty for breaches of certain obligations that have to be clearly worded in the agreement. The penalty cannot be enacted for the non-payment of rent or communals but rather for cases which do not entail payment of money. There are also limitations to the sum of the penalty. The penalty cannot be taken from the deposit of the tenant.

  2. The landlord can now also clearly demand the maintenance and improvement costs for the entire building ("remondifond", "hoolduskulu" and the likes). This also has to be clearly agreed in the agreement. Many tenants have paid these illegally for years anyway so the legislator is now clearly saying that demanding these costs has actually been illegal.

  3. Another blow for the tenants - the contract can now state that the tenants needs to liquidate all traces of normal wear and tear after the usage basically opening the door for demanding a renovation of the apartment. This would open up a very difficult debate about what exactly was the state of the apartment upon start of the lease and after. It is obvious that the renovations will be costly and we also recommend not signing a contract with this clause.

These law changes make it even more important to review the rental agreement before signing it. We have also updated our Guidelines on Rental Agreements that can be found here:

Practical Guidelines on Rental Agreement
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