Rents: Can landlord and tenant freely agree rents in Lebanon?

The Lebanese rental market can be divided into two broad categories: the old controlled market, and rent contracts signed after 23 July 1992.

Rents can be freely agreed between landlord and tenant only in contracts signed after 23 July 1992. These contracts are governed by the chapter on the rental contract in the Code of Obligations and Contracts, whose main feature is contractual freedom (though freedom is restricted in some regards, see below).

Contracts relating to built property signed before that date are not free as to rents. They are not covered by the Code of Obligations, but instead by Temporary Law No 160 (promulgated 23/7/1992), which systematized the ‘temporary’ rent control provisions which applied in previous years.

Rent contracts for real property exceeding three years must be registered in the real estate registry.

What rights do landlords and tenants have in Lebanon, especially as to duration of contract, and eviction?

The date of contract signature is important:

Contracts signed after 23 July 1992

In this case, the tenant who signed a one-year contract has the right to hold onto the property for three consecutive years. This clause is implied in all rental contracts by article 543 of the Code of Obligations and Contracts, and cannot be avoided. Thereafter, the landlord is entitled to end the contract, or to renegotiate.

Excluded from this rule are:

• Seasonal      rents contracts for summering and wintering places.
• Rent      contracts of places presented by employers to their employees.

If the tenant benefiting from an extension desires to leave, he should notify the landlord two months before the end of the extended period, by registered exposed mail, or via a notary.

Certain other terms are implied in contracts signed after 23 July 1992, but these terms can all be specifically varied by contract:

• The      landlord guarantees the peaceful unopposed use of the rented place by the      tenant for its stipulated purpose. He also guarantees relief from any      hidden defects that render the place unusable. Minor regular maintenance      is the tenant’s responsibility, including minor repairs, e.g. window      glass, doors and windows, broken tiles, and decoration.
• The      landlord pays taxes and other dues, unless otherwise agreed.
• The      tenant is obliged to keep the place in good condition, and to pay the rent      on time, but the tenant is not responsible for deterioration resulting      from ordinary use, force majeure and the elapse of time.
• Subletting      is allowed for the same use unless otherwise stipulated in the contract. The      secondary tenant is responsible vis a vis the landlord. The landlord may      pursue the original tenant, or the secondary tenant, in which case the      original tenant maintains the right to intervene.
• The      contract is cancelled if the tenant uses the place for a purpose different      from that stipulated in the contract, or neglects the place so that      serious damage results, or if the tenantdoes not pay due rent.
• The      contract does not end upon the death of the tenant or the landlord.

Contracts signed before 23 July 1992

In this case, the tenant has the right to continuously renew the contract for the lifetime of Law 160, with rent increases according to predetermined formulae.

Law 160 excludes:

• Rental      contracts for agricultural lands and attached buildings
• Seasonal      rents of summer and wintering places
• Dwellings      provided as part of the work contract to employees, whether free or for      pay.
• Rent      contracts of villas built after March 25, 1974
• Contracts      of state and municipal properties
• Contracts      of furnished places specified as ‘touristic’ (Art. 2)

The contract is terminated, and the tenant may be evicted, in the following cases:

• Non      payment of rent for two months after being legally notified.
• Abuse      of the property causing damage beyond ordinary use, or violating contract      conditions without written approval of the landlord.
• Total      or partial concession of the property, without written approval of the      landlord.
• The      tenant acquiring an equivalent residential place, within a distance of      seven kilometres.
• Leaving      the property for other than security reasons for a full year without      interruption, while paying the rent, and for 6 months, while not paying      the rent.
• For      non-Lebanese, leaving the property for six months without interruption.      (Article 10 of law 160/90)

In case of the death of the tenant, or if he leaves the rented dwelling, he can be replaced by:

• His      spouse, his ascendants and his children who continue to live in the      dwelling.
• Relatives      who entered to the dwelling at the beginning of the contract and continue      to live therein (article 5 of law 160/90)

The tenant may not sub-let except with the consent of the landlord in writing, or unless stipulated in the conditions of the contract (Article 7 of law 160/90). In case of full or partial sub-letting with the landlord’s approval, the rental relationship remains a relationship between the landlord and the original tenant. The secondary contract period ends with the original contract.

The landlord may terminate the contract and regain the property, if:

• The      landlord, or for a member of his/her direct family, needs the dwelling for      personal use, provided he/she does not own another equivalent property in      the same municipal area.
• The      landlord intends to demolish the building and reconstruct the property.

In both cases the landlord should pay to the tenant damages of not less than 25% and not more than 50% of the property value (article 8 of law 160/90)

How effective is the Lebanese legal system?

Legislation

The Code of Obligations and Contracts (1932) is the primary source for Lebanese civil law. The landlord-tenant relationship is governed by the chapter on the rent contract. However, in past decades temporary laws were passed to protect tenants. The last of these was the Temporary Law No 160 of 23 July 1992, which regulates rent contracts of built properties signed before its promulgation. Rent contracts signed after 23 July 1992 were liberated, and returned to the jurisdiction of the Code of Obligations and Contracts which establishes general principles, most of which may be modified by contract.

Brief History: Recent changes in Lebanese landlord and tenant law

Parliament is now studying a new draft temporary rent law to replace Law 160. It would allow contracts signed before 1992 to be renewed by the tenant for eight more years, at which time the landlord would have the option to pay the tenant 20% of the property value in return for the tenant moving out, or freely agreeing on a new rental contract.

Neither the Owners’ Association nor the Tenants’ Association are happy with the draft law