Documents when renting and leasing real estate

Real estate rental may be quite risky for both parties: the landlord and the tenant, as there are many formalities, which must be negotiated and discussed in the rental agreement. Also, when it comes to renting residential properties in Latvia - the local laws are aimed to grant extra legal protection (often excessive) to the tenants.

That is why, prior to renting your property, it is very important to study the subject, perform due diligence and evaluate all possible risks in order to avoid possible complications or lawsuits later.

There is no official list of documents required in order to conclude a residential real estate rental agreement. Nevertheless, there are some documents, which you will most likely need to draft / present:

• Real estate rental agreement;
• Passport copy / registration certificate (for companies);

Even though not mandatory, it is highly recommended for both parties to present / check the following documents in order to avoid possible risks and frauds:

• Property land book certificate / extract;
• Residential / registration address of both parties;
• Invoices for the last 3 months of the utility payment for the property;
• Statement, indicating there is no utility debt;
• Acceptance act indicating current data of the counters;
• Inventory list and acceptance act, listing all furniture and equipment remaining in the apartment (if any) with their cost;
• Notarized power of attorney (if rented by the representative).

Keep in mind, that this list of documents is not mandatory and may vary on case by case basis.

Grounds for real estate property renting and leasing

Usually the grounds for renting or leasing a real estate in Latvia serves rental or lease agreement. It is important to indicate that in Latvian language and legislation there is a clear distinction between those two.

Property rental (in Latvian: īre)

Legal relations, in which a residential property is being rented to the tenants, or premises for residential purposes.

Property lease (in Latvian: noma)

Legal relations, in which commercial premises are being rented to the lessee, or any type of property is being leased for any other purpose, rather than residing (warehouses, storage rooms, commercial activity, office space etc.).

It is quite essential to understand and distinct those two types of legal relations as each of them has slightly different requirements and is regulated by a different set of laws. For example, rental agreements are covered by the law ‘About rental of residential premises’, setting numerous requirements for both parties and subjecting such relations to consumer rights laws. While lease agreements fall in the field of commercial law and laws regulating commercial activity.

Laws concerning real estate property lease and rental

If you or your business is owning a real estate property you would like to rent or lease - it is important to know what rights and obligations you have in this regard, as sometimes, violation of the latter may result not only in a civil lawsuit, but also in an administrative violation or even in a criminal case.

Speaking about rental of residential property in Latvia - it is a strictly regulated industry. Few major laws serve mostly to protect local tenants from abusive and illegal behaviour of the landlords, providing extra legal protection to those renting residential premises for their personal residence, setting numerous legal barriers and restrictions for landlords.

Talking about lease of commercial premises - this industry is also regulated, but most of the regulations are aimed to ensure that the companies leasing premises actually pay taxes from their income. As it was mentioned previously - leasing real estate falls in scope of the commercial law, thus, setting fewer legal restrictions between parties providing more autonomy in their legal relations, as in such case both parties are recognized as equally economically well-protected.

Apartment law

This law serves as fundamental grounds defining what is considered ‘an apartment’ and ‘residential property’ as well as what a ‘property rental’ is. It also regulates legal relations between residential apartment owners in a single building as well as decision-making procedure regarding administration of the building and other common property-related issues.

The law About rental of residential premises

This law covers all legal relations between tenants and landlords engaged in a rental agreement. It also sets liability of both parties and lists rights and duties under different circumstances.

It is highly recommended to go through this legal act prior to renting residential premises, as all regulations included in this law are mandatory for all landlords and even mutual written agreement agreeing on other rules and provisions will be considered invalid by any court and provisions of this law will be applied automatically instead. It strictly lists how and under which circumstances landlord can evict tenants, what services are compulsory for landlord to provide to his tenants and other essential matters. In certain cases, if landlord does not follow the rules of this law - it may be considered an administrative violation or even a criminal act, meaning a police can be called by tenants to protect their rights.

This law also lays down competence for Rental board - a municipal body, serving as supervisory organ to protect the rights of tenants against illegal actions of the landlords.

Registration of property rental or lease with the tax administration

There are some extra legal requirements to the landlords and lessors of the real estate property, aimed to ensure that taxes are being paid from the income. Therefore, it is a mandatory procedure for landlords to register their rental contract and pay tax monthly.

If you are a natural person renting OR leasing a real estate property - it is a mandatory that you must visit local department of the tax administration prior to concluding an agreement and register your property lease or rental there. In order to register a property rental / lease you need to have an account in the local Electronic Declaration System (EDS) and submit a copy of the rental / lease agreement. Within 2 business days your rental / lease is registered and you may start renting / leasing your property and paying 10% tax on an annual basis.

If a rented / leased property is owned by a legal entity (a company, for example) - there is no need to register rental / lease agreement at the tax administration. In this case the company will naturally pay 15% corporate income tax (CIT) from the income.

Document preperation and real estate financing services

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