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International Internet Magazine. Baltic States news & analytics Tuesday, 24.04.2018, 04:01

Is it allowed to request from the lessor compensation for improvements done to the property?

Aleksandrs Koposovs, lawyer of Law office INLAT PLUS, 20.10.2011.Print version
Question: Our company has entered into a lease agreement with a shopping centre. The agreement’s term is soon to expire and we’ll have to vacate the premises. There’s a provision that we’re not entitled to compensation for improvements done to premises. Is it possible to request lessor to pay compensation regardless of the said provision? We have invested significant sum of money and it is impossible to remove the improvements without damaging the property.

Answer: Considering that law is above any agreements this issue shall be addressed in accordance with the laws. Pursuant to Section 2140 of the Civil law, necessary and useful expenditures that a lessee or tenant has made for property, shall be reimbursed by the lessor or renter in accordance with the general provisions regarding reimbursement of expenditures. Improvements done to premises by the lessee are considered useful expenditures within the meaning of the Civil law of Latvia.


According to Section 867 useful expenditures shall be reimbursed to persons who have, in good faith, administered the property of another as if it were their own, provided they have not yet received reimbursement, having received income from this property, which shall be set off in such cases. These expenditures shall be reimbursed only to the extent that they have increased the value of the property. Therefore if there’s a possibility to prove that the improvements have increased the value of the property the said expenses may be deemed useful and the lessee shall have the right to request relevant compensation.


The agreement’s provision restricting the lessee to receive compensation shall also be addressed in accordance with the laws. According to Section 1570 of Civil law immoral and illegal conditions shall entirely nullify the instruction dependant upon them. Section 1553 prescribes that conditions of a transaction become impossible if such are illegal. Therefore upon referring the case to court in order to recover expenses from the lessor, one shall consider petitioning the court to admit the said provision invalid.


Law office INLAT PLUS

Brivibas 40-15, Riga, Latvia

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