Real estate rental: what must be included in the contract to ensure that the tenant does not delay payments?

Renting property in Cyprus is a popular practice, especially for foreign investors and businesspeople. However, despite high levels of trust, tenants sometimes delay payments, which can be a problem for landlords. To minimize this risk, it is important to carefully spell out the terms of the lease.

Payment terms and deadlines

One of the most important aspects of any lease agreement is clarity in the terms relating to payments. In Cyprus, as in other countries, tenants must know exactly when and how much they are required to pay. It is important to specify not only the amount of rent, but also clear deadlines for its payment.

Penalties and fines for late payments

In order to prevent late payments, penalties should be provided for each day of delay. These penalties should be reasonable and reflect the actual losses incurred by the landlord. For example, tenants should be required to pay interest for each day of delay, which will be an additional incentive for timely payment.

Cyprus law provides a specific framework for penalties, and it is important to comply with it. According to the Contracts Law, interest exceeding 10% of the amount owed may be deemed invalid.

Guarantee requirements (deposit)

One of the main tools for protecting landlords is a deposit. In Cyprus, tenants are usually required to pay a deposit, which can be used in the event of a breach of contract. The amount of the deposit may vary, but the standard practice is 1–3 months’ rent.

Termination conditions

To prevent lengthy legal proceedings over unpaid rent, it is important to include termination conditions in the lease agreement. In Cyprus, landlords have the right to terminate the agreement in the event of significant breaches of the terms of the agreement, including non-payment of rent for a certain period (e.g., 30 days).

Agreement on legal costs and jurisdiction

In the event of a breach of contract and the need for legal proceedings, it is important to specify in advance who will bear the legal costs. In most cases, the costs of legal representation and court fees are borne by the party that loses the case.

Property insurance

One aspect that helps protect the tenant’s property is property insurance. In Cyprus, the landlord may require the tenant to insure the rented property in order to minimize risks in the event of damage.

Other conditions

In addition to the main aspects, it is important to include other conditions relating to the use of the property in the lease agreement. For example, if the tenant violates the terms of use or changes the purpose of the property without the landlord’s consent, this may be grounds for termination of the agreement.

Thus, including clear and detailed terms in a Cyprus property lease agreement can significantly reduce the likelihood of payment delays. Particular attention should be paid to aspects such as payment terms, late payment penalties, deposits, termination conditions, and property insurance.