Lease Disputes — the Legal Framework
Lease relationships — offices, industrial and retail space, residential property — frequently end in disputes: who pays rent and until when, in what condition the property must be returned, and when the relationship may be brought to an end. The first source for resolving any of these questions is the contract itself; where the contract is silent, the norms of the lease chapter of the Civil Code of Georgia apply.
Article 581 defines the essence of the lease: the lessor must transfer defined property to the lessee for temporary use and, during the lease period, ensure the possibility of receiving the fruits where they are obtained as income through the proper management of the enterprise; the lessee must pay the agreed rent. The rent may be set in money or in kind, and the parties may agree on other means of determining it. This flexibility means that in a dispute the content of the contract takes first place, and arguments about what the parties must have intended come a distant second.
Early Return — When the Lessee Is Released from Rent
A classic dispute arises when the lessee returns the property before the end of the term and believes that the obligation to pay rent has ended. Article 588 of the Civil Code resolves this directly: where the lessee returns the property before the termination of the lease relationship, they are released from paying rent only if they offer in their place a new, solvent lessee acceptable to the lessor, and the new lessee must agree to take the lease on the same terms.
Where no such replacement is offered, the lessee must pay the rent until the end of the lease relationship. The norm protects the lessor’s income stream: early physical return does not, by itself, terminate the economics of the deal. For lessees the practical lesson is to secure a qualifying replacement tenant — solvent, acceptable to the lessor, and willing to take the same terms — before handing back the keys.
Terminating an Open-Term Lease — Timing and Form
Where the lease term is not defined, the statutory regime of open-term leases applies. Under Article 606 of the Civil Code, each party may declare termination of the lease for the following lease year, with the declaration to be made no later than ten days from the beginning of the lease year. The lease year is the calendar year, and where the parties agree on a shorter period, that agreement must be made in writing.
For a lease of a land plot or of a right, Article 589 adds its own rule: where no term is defined, termination is admissible only at the end of the lease year, and it may be terminated no later than one month after the end of the lease year. These rules also apply where the lease relationship may be terminated earlier than the period established by law. Confusion between the two regimes — general open-term leases and land or right leases — is one of the most frequent causes of failed terminations, and the declaration should always fix the date, the addressee and the lease year it targets.