Contributed by Ments.
1 Real Estate Ownership
1.1 Legal Framework
Ownership is one of the fundamental constitutional rights. Everyone has the right to own property (including real estate) and the property right of all owners has the same content and protection. The property right is an absolute right applying erga omnes, is imprescriptible (i.e., not subject to a statute of limitation, so its judicial enforceability is never lost), and is rarely amended.
Unless prohibited or otherwise limited by various special laws, the same applies to foreigners, who are entitled to acquire and own the real estate property in Slovakia. For example, a specific regime applies in terms of agricultural land, in which case, the non-residents are still nowadays restricted in the acquisition of real estate in certain ways. For illustration purposes, acquiring ownership of agricultural land is restricted to (i) citizens of states, (ii) companies residing in states, or (iii) states and their administrative units, which legal system does not allow Slovak citizens or legal entities to acquire agricultural lands in such state. This reciprocity restriction does not generally apply to EU Member States, the European Economic Area (EEA), and to natural persons with residence or legal persons with registered seats in such states. However, these persons may still acquire ownership by inheritance.
Further restrictions may apply to foreign investment from the perspective of the foreign direct investment (FDI) reviews, which may, under specific cases (in the case of investment into the so-called critical infrastructure) restrict investors from the acquisition of the companies or assets in Slovakia. Though the FDI screening in the case of non-critical infrastructure companies/assets is voluntary (while, for the avoidance of any doubts, the critical infrastructure corresponds to elements of critical infrastructure in the energy, pharmaceutical, metallurgical, or chemical sectors as per Act No. 45/2011 Coll. on Critical Infrastructure), the Slovak government reserves the right to initiate ex post-screening screening proceedings on any foreign investment within two years from completion of the foreign investment (in case of non-critical infrastructure and without time limit in case of critical infrastructure) if there is a reasonable belief that foreign investment had a negative impact when it was completed. FDI may result in significantly altering the transaction (for example allowing the purchase of a smaller portion of shares or a divestment obligation) or even prohibiting it completely.
Specific ownership regime applies to certain assets, such as mineral wealth, caves, underground water, natural medicinal resources, and watercourses, which may only be owned by the state.
Despite its constitutional grounds, ownership may be limited or taken away. There are four cumulative conditions to expropriate a property, which is a forced restriction of the ownership right. The expropriation must be carried out on a legal basis, to the necessary extent, only in the public interest and always for reasonable compensation. Otherwise, there would be a violation of the ownership right.
1.2 Registration of Ownership
In Slovakia, the Real Estate Cadastre (Cadastre) is used for the registration of real estate ownership. The Cadastre is a public register and information system containing the geometric determination and description of all real estate properties in Slovakia and rights to them (such as ownership, pre-emption, mortgages, easements, etc.) and operates under the terms and conditions prescribed under the Act No. 162/1995 Coll. on the Cadastre of Real Estate and on the Registration of Ownership and Other Rights to Real Estate (Cadastre Act).
A person may dispose of a real estate property only subject to registration of such disposal with the Cadastre. In other words, disposals of real estate properties in Slovakia become only effective upon the decision of the competent Cadastre office on the proposed disposal (transfer, encumbering, etc.). There are, however, certain types of rights/liens pertaining to the real estate properties, which are not registered with the Cadastre and are created or established by virtue of law or as a result of a decision of an authority (such as easements or leases).
1.3 Publicity of Real Estate Register
The Cadastre is a public register and the vast majority of the information registered therein is publicly accessible. Ownership deeds, where entries such as the nature of the property, its location, owner, or any third-party rights (easements, mortgages, and alike), are freely accessible online as well as easily traceable based on the cadastral area and the title deed number.
However, the availability of documents, such as agreements, contracts, and court decisions – i.e., the grounds for registration of the property rights, is limited and these documents are only accessible to the owners, parties to a real estate transaction, their authorized representatives or specially authorized persons, as cartographers, within the meaning of special legislation.
Entries in the Cadastre are reliable and binding unless and until proven otherwise. Entries, whose value has been validly questioned must be rectified.
1.4 Protection of Ownership
A person seeking ownership right protection is entitled to apply to the court. If interested in protecting the ownership right through the court, he/she may claim for determination of the ownership by the court. To succeed in such type of proceedings, the claimant must demonstrate a compelling legitimate interest for the protection of his/her ownership right.
The judicial protection of real estate ownership is not just about determining whether there is a right or not. There are also specific mechanisms to ensure the direct protection of the ownership. For example, in the case of unauthorized occupation of real estate, the owner may seek to have the real estate evicted by a court order.
Trials in Slovakia tend to be long-lasting, which justifies the frequent use of interim measures (in Slovak, neodkladne opatrenie). An interim measure may order a party to do, endure, or refrain from doing something. This legal instrument is used to quickly ensure the protection of real estate ownership if there is an imminent threat to the rights or interests of the owner(s).
If the owner suffers damages in connection with the unauthorized use, they are entitled to compensation to the extent of the actual damages and profit loss (if any). Court proceedings shall be preceded by an attempt to out-of-court settlement and only if failed, the damage shall bring its claim to the court.
As already mentioned in Section 1.1, despite its constitutional grounds, ownership may be limited or taken away. In case of expropriation of real estate by the state, the owner is entitled to adequate compensation to be adhered to by the court in proceedings to rule upon the expropriation itself and the compensation.
2 Real Estate Acquisition
2.1 Share Deal or Asset Deal?
Real estate acquisitions are made either through the transfer of shares in the company to own the real estate property (Share Deal) or through the transfer of assets of the company (Asset Deal), each of them having its own advantages, specifics, and limits.
In both types of deals, conducting due diligence is crucial to assess the risks associated with the acquisition. It usually includes financial, legal, tax, environmental, and operational aspects of the target company and its real estate assets. This process may uncover any potential liabilities or issues that need to be addressed and is necessary when purchasing either the shares or the real estate property.
2.2 Share Deal
The acquisition of real estate through a Share Deal, i.e., indirect real estate acquisition, involves purchasing shares of a company to own the property instead of transferring ownership of the property itself. Share Deals are primarily governed by corporate law principles, meaning the acquisition process must adhere to all legal requirements related to corporate governance, shareholder rights, and the transfer of shares as stipulated by Slovak laws.
Acquirers usually choose Share Deal when they aim to benefit from a going concern and want to continue with the business operation of the acquired company. By way of a Share Deal, the acquirer not only acquires indirectly the real estate, but it also acquires all rights and obligations pertaining to the real estate such as permits, maintenance agreements, or lease relationships. This approach provides the acquirer with the advantage of not only obtaining indirect ownership of the real estate but also “taking over” all related rights and obligations, such as permits, maintenance agreements, or lease relationships. However, when considering the Share Deal, change-of-control clauses, which are commonly used, must be observed.
A share deal is implemented by a purchase agreement, specifically a share purchase agreement, the subject of which is the transfer of shares in a company. In Slovakia, the vast majority of entrepreneurs do their business in the form of a limited liability company (in Slovak, spolocnost s rucenim obmedzenym) or a joint stock company (in Slovak akciova spolocnost). In the case of agricultural lands, the establishment of cooperatives (in Slovak, druzstva) is also common. Under a Share Deal, alongside the acquisition of the shares in question, the acquirer indirectly acquires also the rights and obligations relating to real estate owned by the company acquired.
In the case of a limited liability company, a shareholder may in general transfer their share to another shareholder or a third person by contract subject to the regulation under the founding documents of the company and subject to the company’s general meeting approval, if required. A written agreement with notarized signatures of all parties thereto is required for a transfer of an ownership interest in a limited liability company. The transfer needs to be registered in the Commercial Register.
Shares in a joint stock company can have the form of certificated registered shares (physical shares) or book-entered shares. A common form of shares used by the companies is the certificated registered shares. Book-entered shares are typical, particularly with respect to financial or regulated institutions, such as banks.
Shares in a joint stock company are in principle freely transferable, except if, according to the articles of association, their transferability has been limited (but not restricted) subject to the company’s approval, in which case, the articles of association must also state the grounds for disapproval by the company with the share transfer. The articles of association may also provide for further/other conditions for share transfer. Failure to meet the prescribed conditions leads to invalidity of the transfer. Also, the transferability of shares in a joint stock company depends on the type of the shares.
In order to transfer the certified registered shares, an endorsement and handover is required. The transfer itself is completed upon the endorsement and hand-over of shares and is not required to be registered in the Commercial Register, however a change in the shareholder’s structure requires to be registered in the Commercial Register, provided that the company has a sole shareholder.
The book-entered shares are transferred by an agreement and registration of the book-entered shares on the owner’s account maintained by the central depository of securities of the Slovak Republic. The transfer itself is not required to be registered in the Commercial Register, it is completed upon the registration with the central depository of securities of the Slovak Republic.
2.3 Asset Deal
Acquiring real estate through an Asset Deal involves the direct purchase of the property itself, rather than acquiring shares of a company that owns the property. This approach is mostly used when the acquirer does not intend to acquire the whole company owning the real estate but only wishes to directly purchase the immovable asset(s).
When compared to the Share Deal, due diligence in the case of an Asset Deal may be simpler, focusing only on the inspection of the property, i.e., verifying the title, assessing any existing liens or encumbrances – third-party rights, access to the property, environmental burden and alike, as well as the basic corporate entries and governance of the seller.
A purchase agreement shall include all detailed terms and conditions, with the seller’s notarized signature and with all the pages, including annexes, connected together to a single document.
Advantages of an Asset Deal when compared to a Share Deal lay in the acquirer’s possibility to pick up only those real estate properties, that the acquirer wishes to buy, which significantly lowers the risk of any hidden liabilities furthermore, the acquirer does not have to acquire the whole company. However, the due diligence still needs to be detailed, so as to avoid undisclosed encumbrances, potential disputes related to the property, or further customary identified flags when inspecting a real estate property.
Furthermore, a specific regime to commercial leases applies in cases, when ownership of a commercially leased real estate property change takes place (briefly, as a general rule, a tenant shall be entitled to terminate its lease agreement as a result of the change of the real estate owner). In addition, even due diligence may not retrieve undisclosed encumbrances or disputes related to the real estate property.
Last, yet importantly and irrespective of the form, in Slovakia, ownership of a real estate property is subject to local tax, payable yearly and the rate varies subject to the location of the real estate property. When speaking of taxes, though there is no asset transfer tax in Slovakia, any gain from the real estate property sale is subject to general income tax in Slovakia, unless the disposal qualifies for income tax exemption; this takes place should the seller own the real estate asset more than five years or if at least five years lapsed since the real estate property has been exempted from its commercial use, if used for commercial purposes by the entrepreneur.
2.4 Disposal Process
The purchase agreement must be executed in written form in order for it to be valid, the signature(s) of the seller(s) must be notarized.
If a sold property is subject to matrimonial community (joint co-ownership) of the property or if the property is subject to co-ownership of multiple co-owners, consent of spouse/other co-owner(s) is required in order to avoid future challenging by spouse/other co-owner(s) of the Asset Deal. In addition, the co-owners have statutory pre-emptive rights, and therefore a sold property (its party) must be at first offered for purchase to all the co-owners only unless the pre-emptive right of the co-owners is affected, the seller may proceed with the Asset Deal to the third-party acquirer.
The transfer of the ownership right to the real estate is effective at the moment of registration in the Cadastre. The application for entry into the Cadastre may be submitted to the relevant cadastral department according to the location of the property in writing or electronically. The standard time limit for registration is up to 30 days and is subject to payment of EUR 100 fee. The accelerated procedure, associated with a higher fee (EUR 300), shall guarantee registration in the Cadastre within 15 days.
2.5 Registration of Change of Ownership
The process of registration is described in Section 2.4.
2.6 Risks To Be Considered
As mentioned earlier, even in the case of an Asset Deal, due diligence shall still be detailed and shall focus on the following risks (a list of which is not exhausted), which are customary dealt with in the course of Asset Deals.
Encumbrances
Easements and liens are in most cases those entries, which are publicly accessible since they are registered with the Cadastre on particular deeds of title. Encumbrances may be created by contract, a public authority decision, or by operation of law. There is a difference between contractual easements and decision-made/statutory-made easements. While the contractual easement has to be registered with the Cadastre in order to become effective, decision-made/statutory-made easements do not have to be registered with the Cadastre. This is the reason why the due diligence shall be detailed in both forms of real estate property acquisitions in Slovakia.
Pre-Emptive Right
A pre-emptive right takes place if the property is co-owned by multiple co-owners. If any of them decides to transfer part of the property, first they must offer its part for transfer to the remaining co-owners. Only unless any of the co-owners exercises its pre-emptive right, the transferring co-owner may proceed with transfer to a third-party acquirer. This pre-emptive right is designed to give existing owners the opportunity to maintain their ownership structure and prevent unwanted third parties from acquiring any part of the property. The transferring co-owner must offer its part to the remaining co-owners under the same conditions, as expected under the transaction with the third-party acquirer. Unless the pre-emptive right is respected and the part of the property is sold to a third-party acquirer without giving the remaining co-owners the opportunity to purchase it at first, the remaining co-owners are entitled to challenge the transaction at a trial, seeking to have the transaction annulled and to exercise their pre-emptive right.
Acquisition of Ownership from a Non-Owner
When acquiring ownership of real estate, checking the acquisition title of the seller is essential. Under Slovak law, the real estate property cannot be acquired from a now-owner, i.e., if the seller is not a legal owner of the real estate (due to some defects in the original acquisition of the real estate by the seller), it cannot legally sell the real estate property. Therefore, it is necessary to analyze the acquisition titles backward for the period of 10 years plus one proceeding acquisition title (the length of the prescription period plus one more title) so it can be determined whether there are any risks to the ownership right of the seller would be challenged.
Spousal Consent
Please, refer to Section 2.4.
Commercial Leases
Please, refer to Sections 2.4 and 6.1.
Legal Compliance
Real estate properties are subject to various local, state, or national regulations including zone planning, environmental regulations, and building codes. Non-compliance with these regulations can result in legal liabilities, fines, or even restrictions on property use. Also, it is very important to look at the planned construction of utility networks and significant investments, in order to determine whether there is any risk of expropriation.
Restitution Claims
In the past (from 1945 to 1990), owners of the land have been forced to transfer their properties (in particular lands) to the state. Since 1990, the modern state has had the ambition to remedy these unlawful takeovers of the land and allowed former owners of the properties, or their heirs, to claim restitution of their properties to them. Time periods for submission of any restitution claims have already lapsed. However, certain restitution proceedings are still pending, resulting in potentially invalid transfers of the properties nowadays. Investigation of competent authorities is a customary part of real-estate due diligence in Slovakia.
3 Real Estate Financing
3.1 Key Sources of Financing
Real estate financing in Slovakia involves several key sources, each with its specific characteristics. Commercial banks offer various mortgage loans for individuals as well as leveraged financings to developers. It is the most common form of real estate financing. Most banks give a mortgage up to a maximum of 80% of the real estate value in the case of natural persons and customarily up to 60% when speaking of leveraged financings.
Many developers use also investments from smaller private investors by issuing securities and co-financing their investment activities with these funds (such as bonds, crowdfunding, out-of-the-bank financing, etc.). However, the cost of the funds from ordinary investors, compared to bank loans, is usually much higher.
3.2 Protection of Creditors
Irrespective of whether the funds come from the bank or private investors, any lender usually seeks for security to avoid losing its investment, should the borrower fail to repay the borrowed funds. The most used types of security in relation to real estate financing are:
a mortgage, establishing an in rem right over the real estate property, allowing the mortgagee to reimburse its investment to the project by means of selling the real estate property under the agreed terms, should the borrower fail to comply with the agreed terms of the financing; a mortgage is registered with the Cadastre and is considered to be one of the most secure security types used in the financing;
a pledge over receivables, which establishes an in rem right over the receivables of the debtor (as a specific rule, a pledge over receivable may be established only if a receivable is freely assignable, or subject to the consent of the third-party creditor with the establishment of a pledge;
a pledge over shares, which is widely used in real estate financing, and which implicitly forces the shareholders of the developer to be involved and to guarantee the repayment of the funds provided;
a pledge over bank accounts, which is a sub-group of a pledge over receivables, while it is important to note, that generally, bank accounts receivables are not freely transferable, and therefore this type of security is mainly used within banking financings;
a notarial deed, which represents a directly enforceable execution title over the debtors’ assets without the need to undergo a court trial beforehand.
As the most commonly used type of security, a pledge is established by a written pledge agreement between the pledgee and the pledgee’s creditor. Subsequently, the pledge over real estate is registered in the Cadastre and, if the debtor fails to fulfill his obligation, the creditor can enforce its pledge. In the first instance, the creditor should call on the debtor to fulfill the obligation and give him a reasonable period of time. If the debtor fails to fulfill the obligation even within the additional period, the creditor may proceed to enforcement of the pledge, which may include the voluntary sale of the pledge, auction, or other means agreed in the contract.
In case of the debtor’s failure to fulfill his obligation, the creditor always has the option to file a lawsuit with the court, which decision is binding and enforceable.
4 Real Estate Taxes
4.1 Transfer Taxes
There are no real estate transfer taxes applicable in Slovakia.
However, if the seller receives income from the sale of the real estate, that exceeds the costs of the seller for the acquisition of the real estate property by the seller in the past, such surplus may be subject to income tax in Slovakia, provided this income is not exempt from tax. Income from the sale of real estate is exempt from tax after a period of five years from the date of its acquisition or from the exclusion from assets used for business if the asset was used for business purposes. The income tax rate varies depending on whether the income is taxed by a natural person or a legal entity and it ranges from 15% to 25%.
The sale of real estate is subject to VAT only in the case that the seller sells real estate during an economic activity, i.e., the sale of real estate is the subject of his business activity. Also, the sale of real estate is subject to VAT if the seller has taken active steps prior to the sale such as those used by business entities – e.g., putting in utilities, using proven marketing steps, etc. The sale of private real estate by a private individual is not subject to VAT.
In this context, it should also be noted that, as of 1 January 2025, a new Act has come into force introducing a transaction tax. This tax would only be applicable if the payment is made cashless from the account of an individual entrepreneur/corporate entity. The tax rate is 0.4% for cashless payments made from a transaction account, regardless of whether the payment is directed to an account in Slovakia or abroad, with a maximum tax amount of EUR 40 per transaction.
4.2 Specific Real Estate Taxes
The real estate tax is the only tax directly related to real estate ownership, while Act No. 582/2004 Coll. on Local Taxes and Local Fee for Municipal Waste and Minor Construction Waste distinguishes between land tax, tax on buildings, and tax on flats and non-residential premises in a residential building. It is a local tax, which means that the administration of the real estate tax is carried out by the relevant municipality. The real estate tax is payable once a year and the owner is obliged to file a tax return by January 31 of the year following the year in which the property was acquired. The rate of tax depends on the type and size of the property and is determined by the municipality in which the real estate is situated. Real estate owned by the municipality, state, churches, public universities, public research institutions, the Slovak Red Cross, etc. are exempt from this form of tax.
5 Condominiums
5.1 Legal Framework for Condominiums
Condominiums (in Slovak, bytove domy) are regulated by Act No. 182/1993 Coll. on the ownership of flats and non-residential premises (Act). According to the Act, condominiums (apartment houses) mean buildings in which more than half of the floor area is intended for housing, the flats and non-residential premises are owned or co-owned by individual owners and there are common parts and common facilities in the proportionate co-ownership of these owners of flats and non-residential premises.
5.2 Rights and Duties of Co-Owners
According to the Act, the owner of a flat or non-residential premises in a condominium has a couple of duties, such as the owner is obliged to maintain its premises in a condition suitable for proper use, not to disturb or endanger others in the exercise of their rights, to remove defects and damage, to allow the entry on request of a representative of the community and alike.
On the other hand, the owner of premises shall be entitled to use its premises, to rent them to another person, the right to inspect documents related to the management of the building or the use of the operation, maintenance, and repair fund and lastly the right and at the same time obligation to participate in the management of the building and to vote as a co-owner.
5.3 Liability of Co-Owners
In addition to the general obligations of the premises’ owners described above, co-owners are specifically required to repair any defects or damage they or their tenants cause to the property. Secondly, co-owners must permit the correction of deficiencies found during safety inspections of the technical equipment. In case of obstructing these corrections, they are responsible for any resulting damage. Furthermore, to ensure compliance with obligations related to the management of the condominium, a lien can be placed on the co-owners unit in favor of the other co-owners. Co-owners are also obliged to pay payments to the fund for operation, maintenance, and repair, and reimbursement for performances. In order to secure claims arising from legal acts concerning the common parts of the house and claims arising from legal acts concerning the flat or non-residential premise made by the owner, a pledge in favor of the other owners is created by law on the flat or non-residential premise in the house.
5.4 Rights and Duties of Condominium Associations
According to the Act, condominium associations have the following rights and duties:
Managing and administering the common areas and facilities of the condominium and decision-making regarding maintenance, repair, and improvements; collecting contributions from co-owners for the costs associated with their responsibilities and creating and managing a fund for repair is another right of association; enforcement of the rules and regulations set out in the condominium’s bylaws and imposing penalties for violations. When it comes to legal matters or disputes involving the condominium, the association is the representative acting on its behalf.
The association comes with certain duties, such as maintaining and repairing the common areas and facilities, ensuring their safety and good condition. It also needs to act responsibly, when it comes to managing the condominium’s finances, keeping accurate financial records, and providing regular reports to the co-owners. Addressing any deficiencies identified during safety inspections promptly and ensuring compliance with all relevant laws and regulations related to safety, health, and building standards is another duty to be fulfilled. Regular meetings should be held for an association to communicate with the co-owners all the important decisions, upcoming maintenance work, and any changes to the rules. Furthermore, the association has a duty to resolve conflicts among co-owners and between co-owners and the association itself in a fair manner.
6 Commercial Leases
6.1 Form and Contents of a Lease Agreement
In Slovakia, real estate lease agreements are primarily governed by Act No. 40/1964 Coll., the Civil Code, as amended (Civil Code). Lease and sublease of non-residential premises are specifically regulated by Act. No. 116/1990 Coll. on the Lease and Sublease of Non-Residential Premises (Lease Act), as amended. The Lease Act applies to the lease and sublease of non-residential premises intended for business, commercial activities, administrative purposes, storage, provision of services, etc. Generally speaking, premises that are not used for living but for other purposes are governed by the Lease Act. Other leases of real estate are all governed by the Civil Code. When entering into a lease agreement, it is important to clearly specify the purpose of the lease and proceed according to the relevant regulations. There are some differences when it comes to the lease agreement according to the Civil Code and the Lease Act, for example, a lease agreement concluded under the Lease Act is much more formalistic. For the validity of a lease agreement concluded under the Civil Code, it is sufficient to specify the subject of the lease. For the validity of a lease agreement under the Lease Act, the subject, the purpose, the amount of rent, the due date, the method of rent payment, and the lease term must be specified, If the agreement does not include any of these essential elements, it is absolutely invalid. There are also further specific laws to govern lease of the forest and agricultural lands as well as real estates owned by state, authorities and municipalities.
While under the Civil Code, verbal agreements (including lease agreements) are generally legally valid, in the case of leases, written agreements are strongly recommended for clarity and legal enforceability. On the other hand, according to the Lease Act, the lease agreement must be concluded in writing. Key components of the lease agreement for real estate (irrespective of whether concluded pursuant to the Civil Code or the Lease Act) include identification of the parties, detailed description of the leased property including all relevant specifics, purpose of the lease, term of the lease, rent and payment terms, and rights and obligations of both parties. A lease agreement for a flat is also regulated by the Civil Code and in order for it to be legally valid, it must be concluded in written form. Other key components are similar to the ones listed above.
6.2 Regulation of Leases
Please, refer to Section 6.1.
6.3 Registration of Leases
Registration of a real estate lease is not required in Slovakia.
In cases of leases exceeding the five-year term, registration with the Cadastre is voluntary. Non-registration has no impact on the validity or effectiveness of the lease agreement or the lease itself. The advantages of registration lie in its publicity, which means any third party will be aware of the lease’s existence.
6.4 Termination of Leases and Renewals
Any lease agreement may be either terminated or renewed by the agreement of its parties. Generally, parties to the lease agreement are entitled to deviate from the prescribed means of a lease termination, and even more, they can provide for their own termination reasons.
In commercial leases, it is common to negotiate the prolongation options of the lease, either automatically upon notice from one party or by agreeing on a new amount of rent.
In terms of commercial leases, a lease for a definite time shall be terminated automatically by the lapse of the agreed lease term. The landlord shall be also entitled to terminate a lease for a definite time by notice with a three-month notice period in cases when the tenant uses the premises in breach of the lease agreement and when the tenant is in delay with payment of the rent of more than one month, tenant subleases the premises without the landlord’s consent and a couple of further reasons specified in the laws. On the other hand, the tenant shall be entitled to terminate the lease agreement by notice if the tenant is no longer entitled to perform the activities for the purpose for which the tenant had leased the property, the premises are no longer suitable for the lease for other reason than due to tenant’s fault or if the landlord flagrantly infringes its duties under the Lease Act.
Compared to the lease agreement concluded for an indefinite time, both the tenant and the landlord shall be entitled to terminate the lease agreement by notice for no cause, unless agreed otherwise between them. When terminating the lease by notice, a written notice must be served and delivered to the other party.
6.5 Rent Regulations and Rent Reviews
Parties have the freedom to set any rental amount they choose when it comes to private contracts. However, leases involving state-owned or municipal properties must adhere to what is known as “market rent.” Typically, lease agreements also feature clauses that adjust rent based on inflation indexes from Slovakia or the European Union on a year-to-year basis. Recently, there has been a trend to cap year-to-year changes in rent, however, due to the decreasing inflation, these caps are used less widely nowadays.
6.6 Services To Be Provided Together With the Lease
Real estate leases often include common services, although the specifics can vary based on the type of the property as well as the terms of the agreement. Typically, the common services include the provision of utilities such as water, electricity heating, waste management, etc. There are also service charges, which are usually billed monthly in the form of advance payments and are subject to annual reconciliation. These are standardly billed separately from the rent, as including them in the rent may invalidate the contract. Among other services, we may include maintenance, such as cleaning, and repair of common areas which is usually included in the rent.
The specific services and utilities included with the rent are clearly detailed in the lease agreement and both parties should agree on what is covered by the rent and what is billed separately.
6.7 Fit-Out Works and Their Regulation
If a tenant wishes to customize the leased premises (so-called fit-outs), a couple of legal and tax implications shall be considered.
Typically, any fit-out works will be subject to the landlord’s prior consent. Tenants will also have to ensure that the renovations comply with building regulations. Many lease agreements require tenants to return the premises to their original condition upon lease termination. A sanction for changing the property without the landlord’s approval is the duty to restore the property to its original state at the tenant’s expense.
Under Act no. 222/2004 Coll., on value added tax (VAT Act), if a tenant carries out fit-out works that enhance the value of the leased premises, such improvements are considered non-monetary income for the landlord, assuming the landlord has not reimbursed these costs and has agreed to the works. Provided that the conditions outlined in the VAT Act are met, this income may be subject to depreciation. Typically, parties agree in the lease agreement on the manner of depreciation of the fit-out works or any other improvements of the premises made either by the landlord (if so-agreed in the lease agreement) or by the tenant (subject to the terms and conditions in the lease agreement).
6.8 Transfer of Leases and Leased Assets
A transfer of the leased property has no effect on the validity of a lease agreement, however, if such transfer occurs, the tenant is usually entitled to terminate the agreement with notice. The termination in this situation is due to the change of the landlord.
Generally, the tenant cannot transfer the lease to another party without the landlord’s consent. If the landlord consents to the transfer of the lease to another party, the lease agreement remains valid and continues under the new tenant, subject to the agreement between the landlord and the new tenant.
7 Zoning and Planning
7.1 How Are Use, Planning, and Zoning Restrictions on Real Estate Regulated?
The use, planning, and zoning restrictions on real estate are regulated through a combination of national and local legislation. The primary legislation is Act No. 50/1976 Coll. on spatial planning and building regulations (Building Act) which regulates the procedures for obtaining building permits, the responsibilities of different authorities, and the requirements for construction projects.
A new Building Act has recently been approved and is set to take effect on 1 April 2025, replacing Building Act. The primary goal of this new law is to simplify and accelerate the construction process while reducing administrative burdens and enhancing transparency. One of its most significant changes is the elimination of the existing two-stage approval process (zoning decision and building permit). Instead, it introduces a single Building Plan Procedure, through which the building authority grants consent for construction activities. At the same time, the responsibility for building law matters continues to fall under the competence of municipalities.
Another important legislation is Act No. 200/2022 Coll. on spatial planning which stipulates that the Office for Spatial Planning and Construction of the Slovak Republic serves as the central state administration body for spatial planning, construction, and expropriation. However, the creation of zoning plans, which define the permitted use of land in different areas such as residential, commercial, industrial, agricultural, and green zones, remains an original competence of municipalities. Municipalities are responsible for developing and approving local zoning plans. These local zoning plans are adapted to local conditions and needs, and all construction work or significant renovation projects are subject to permission from the relevant building authority. The process of obtaining the permission consists of submitting detailed plans and ensuring compliance with the relevant zoning regulations. Then, the building authority specifies in its decision the conditions that must be met during construction.
Compliance with the zoning regulations is enforced through inspections and fines. The building authorities conduct inspections to ensure compliance with building permits and zoning regulations and non-compliance results in fines, mandatory modifications or even demolition of unauthorized buildings.
7.2 Can a Planning/Zoning Decision Be Appealed?
Planning/zoning decisions may be appealed through a process involving administrative review and potentially subsequent judicial review. The general rule applies to the appeal procedure, which means that there is a 15-day time limit for appealing and the appeal is lodged with the authority that issued the decision in question. However, the possibility of appeal is always specified in the decision, which must include a statement of the remedy.
