Russian Federation: Office Lease Agreements In Moscow

Last Updated: 13 October 2004
Article by Daniel Marti

1. Introduction

The Moscow office market has changed dramatically over the past 15 years. While many office buildings have been constructed, demand for new and better office space has increased at least as quickly. Therefore, rents are still high. Annual rent, which often does not include operating expenses and utilities charges, for class A offices ranges from about US $500 to US $800 per square meter.

2. Form of the lease agreement

A lease agreement must be executed in writing. The parties must sign a single document. The agreement is invalid if the parties do not comply with that requirement.

In addition, a lease agreement for a term of not less than one year requires state registration. The agreement is deemed to be entered into by the parties and enforceable only from the moment of its state registration. State registration requires about six to eight weeks from the day when the application is filed with the competent authority. However, the parties may stipulate in their lease agreement that the agreement applies retroactively from an agreed date.

The state registration requirement has a significant disadvantage. An application for the state registration of a lease agreement cannot be filed before the property rights of the owner of the building are recorded in the state register and those property rights cannot be recorded before the construction of the building (except for the fit-out works) has been completed.

3. Premises

The agreement is invalid if it does not identify the premises without ambiguity. The landlord must provide the premises in accordance with the terms of the lease agreement and the purpose of the premises. Potential tenants should employ an engineer who can check the technical parameters (for instance, ventilation, heating, air conditioning) of the premises. Moreover, tenants should require that the lease agreement specify relevant technical parameters. Potential tenants should also employ an experienced architect if the tenant is responsible for the fit-out works in the premises.

Accessories of the premises are deemed to be included in the lease unless otherwise provided by the lease agreement.

4. Transfer acts

At the beginning and the end of the use of the premises by the tenant the parties must sign a transfer act. The transfer act documents the acceptance of the premises by the tenant at the beginning and by the landlord at the end of the use of the premises. Therefore, the landlord and tenant each should carefully list in the transfer act any claims regarding the conditions of the premises.

5. Defects of the premises

The landlord is liable for defects of the premises that totally or partly prevent the use of the premises. Upon the discovery of such defects, the tenant has the right at his choice:

- to demand the repair of the defects at the expense of the landlord;

- to demand a proportional reduction of the rental payments;

- to demand the compensation of the tenant's expenditures for the repair of the defects;

- having notified the landlord accordingly, to withhold from the rental payments the amount of the expenditures made by the tenant for the repair of the defects;

or to demand early termination of the lease agreement.

However, the landlord may choose to repair the defects at his expense. Independently, the landlord is liable to compensate losses of the tenant resulting from defects.

The landlord is not liable for defects of the premises if such defects:

- were reserved by the landlord at the time of the conclusion of the lease agreement;

- were previously known to the tenant; or

- should have been discovered by the tenant during an inspection of the premises at the time of the conclusion of the agreement or the signature of the transfer act.

Moreover, if the landlord fails to inform the tenant of any rights (for example, a mortgage) of third parties to the premises the tenant is entitled to:

- a reduction of the rental payments; or

- an early termination of the lease agreement and compensation of his losses.

6. Rental and other payments

The amount of lease payments must be determined by the lease agreement. The general provision of Russian contract law that the price is established on the basis of comparable conditions if it is not determined by the contract itself does not apply.

The amount of rent is usually fixed in US dollars or Euros. If in accordance with Russian currency regulations payments have to be made in Russian rubles, usually the exchange rate set by the Russian Central Bank on the day of the payment is agreed.

Usually, lease agreements provide for the payment of rent quarterly in advance. Unless the lease agreement provides otherwise, in the event of a substantial delay of a rental payment, the landlord has the right to claim the early payment of up to two rental payments.

Usually, lease agreements provide for the payment of a service charge and the reimbursement of utilities cost (electricity, hot and cold domestic water, heating). Sometimes, services are provided by a management company. One of the reasons for the provision of services through a management company is the optimization of Russian value added tax.

Due to the comparatively high interest rates in Russia, landlords usually insist on a relatively high level of default interest in the lease agreements. If the landlord is not a Russian company, tenants should be aware of Russian withholding taxes. Russian withholding taxes may apply even if the tenant is also not a Russian company.

7. Security deposit

Usually, lease agreements require the payment by the tenant to the landlord of a security deposit which serves to secure the payment obligations of the tenant. The amount of the security deposit is usually equivalent to rent for three months.

8. Access

Typically, the lease agreement regulates the conditions of access by the landlord to the premises, for instance, for inspection, maintenance and repair or showing to potential tenants.

9. Maintenance and repair

Major repairs

The landlord is required to make at his expense major repairs unless otherwise provided by the lease agreement. The term "major repairs" is not defined by the law.

If the landlord fails to make major repairs the tenant is entitled:

- to make major repairs and recover the cost of such repairs from the landlord or withhold from rental payments;

- to demand a proportionate reduction of the rental payments; or

- to demand early termination of the lease agreement and the compensation of his losses.

Current repairs and maintenance

The tenant is obliged to make current repairs and to bear the expenditures for the maintenance of the premises unless provided otherwise by the lease agreement. The terms "current repairs" and "maintenance" are not defined by the law.

10. Sub-lease and assignment

The tenant is not entitled to sub-lease the premises or assign his rights and obligations to a third party without the consent of the landlord.

The term of a sub-lease agreement may not exceed the term of the main lease agreement.

A sub-lease agreement is invalid if the main lease agreement is invalid.

Early termination of the main lease agreement entails the early termination of the sublease agreement unless provided otherwise by the main lease agreement. However, the sub-tenant has the right to enter into a contract with the landlord for the remaining term of the sub-lease agreement and the sub-leased premises on the terms established by the main lease agreement.

11. Transfer of ownership

A transfer of ownership is not a basis for the change or termination of a lease agreement. In other words, the new owner of a building "inherits" the existing lease agreements.

12. Land

If the land, on which the office building is located, is not owned by the landlord (what is usual in Moscow where most land plots still belong to the city or the federal government) the consent of the owner of the land to the lease of office premises may be required by the legislation applicable to the land or by a contract between the owners of the land and the building.

13. Term

The law does not establish a maximum term. If the lease agreement does not fix a term for the agreement, the lease agreement is deemed to be for an indefinite term. A lease for an indefinite term may be terminated by either party by three months notice unless the parties have agreed a different notice period.

While many lease agreements are for a term of 364 days (to avoid the need for a state registration) or three or five years, sometimes lease agreements are concluded for much longer terms. Lease agreements for longer terms provide for regular rent reviews.

If the premises are mortgaged, the term of the lease agreement may not exceed the term of the mortgage without the consent of the mortgagee.

14. Early termination

The tenant friendly statutory provisions summarized hereafter on early termination of a lease agreement are usually amended by the parties in favor of the landlord.

Early termination by the landlord

After having given the tenant written warning and a reasonable time period to cure violations, the landlord is entitled to demand early termination of the lease agreement by the competent court if the tenant:

- uses the premises in a substantial violation or repeated violations of the terms of the lease agreement;

- causes significant damage to the premises;

- is overdue with two succeeding rental payments;

- does not make major repair (if the tenant is obligated by the lease agreement to make major repairs); or

- in other events established by the lease agreement.

Early termination by the tenant

The tenant is entitled to demand early termination of the lease agreement by the competent court if:

- the landlord does not provide the premises or unduly disturbs the use of the premises;

- the premises have defects which disturb the use of the premises and which:<

- were not reserved by the landlord at the time of the conclusion of the agreement;

- were previously known to the tenant; or

- should have been discovered by the tenant at the time of inspection at the time of the conclusion of the lease agreement;

- the premises became unsuitable for use due to circumstances for which the tenant is not responsible; or

- in other events established by the lease agreement.

15. Improvements made by the tenant

Usually, the tenant undertakes to fit-out the premises and the landlord grants a rent free period and a reduction of rent to compensate (often partially only) the tenant for the value of the fit-out works.

Separable improvements

Such improvements are the property of the tenant unless provided otherwise by the lease agreement.

Improvements, which are not separable without damage to the premises

Unless otherwise provided by the lease agreement, upon expiration of the agreement the tenant is entitled to compensation of the value of such improvements made at the tenant's own expense and with the consent of the landlord.

16. Return of the premises

Upon termination of the lease agreement, the tenant is obliged to return the premises to the landlord:

- in the condition in which the tenant received the premises, taking into account ordinary wear and tear; or

- in the condition established by the lease agreement.

For the period of any delay, the landlord is entitled to lease payments and the compensation of his losses.

If liquidated damages were agreed for late return of the premises, the landlord may claim the compensation of additional losses unless otherwise provided by the lease agreement.

If the landlord does not object to the use of the premises by the tenant after the expiration of the lease agreement, the agreement is deemed to be renewed on the basis of the same conditions for an indefinite term.

17. Preferential right

Unless otherwise provided by the lease agreement and subject to having performed his obligations under the lease agreement, the tenant has a preferential right before other persons to enter into a lease agreement for a new term.

Within a reasonable time period before the expiration of the lease agreement or the time period stipulated in the lease agreement, the tenant must inform the landlord of his intention to exercise his preferential right. The preferential right is valid for a term of one year after the expiration of the lease agreement.

If the landlord violates the preferential right of the tenant, the tenant is entitled to claim the transfer to himself of the lease agreement with the third party and the compensation of his losses or the compensation of his losses only. The preferential right only applies if the premises are let to a third party. It does not apply if the premises are used by a third person on another basis (for instance, joint activity agreement) or by the landlord.

18. Insurance

Usually, lease agreements provide that each party shall insure its civil liability (death, injury, damage to the property of the landlord, the tenant or third parties). However, the minimum levels agreed by the parties are relatively low. The landlord is often required to insure the building and the tenant the value of his property and the fit-out works.

19. Currency regulations

In Russia, currency regulations apply. Therefore, payments between landlords and tenants may be subject to restrictions or controls imposed by those currency regulations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions