LAW OF TURKMENISTAN

of February 4, 2017 No. 497-V

About lease

This Law regulates economic, legal and organizational basis of the rent relations and is aimed at market development of rent services in Turkmenistan.

Chapter I. General provisions

Article 1. Basic concepts

1. In this Law the following basic concepts are used:

1) lease – transfer by the owner of property (including the earth, other isolated natural resources) or to the physical and (or) legal entity of certain property or its part authorized by it person in paid temporary use for independent implementation of economic or other activity based on the lease agreement;

2) the lease agreement – the agreement concluded between the lessor and the lessee about transfer to the temporary paid use of certain object of lease directed to establishment of economic and other relations, and also rights and obligations of contracting parties;

3) the lessor – the owner or person authorized by it giving (transferring) to the physical and (or) legal entity to paid use object of lease;

4) the lessee – the physical and (or) legal entity of Turkmenistan, foreign state and the stateless person, and also the foreign state or the international organization using (using) object of lease;

5) the rent – the fixed payment paid by the lessee according to the lease agreement to the lessor for use of object of lease in cash and (or) by agreement of the parties natural forms;

6) the sublease – transfer by the lessee with the consent of the lessor of leased property or its part to the third party in lease;

7) lease right assignment – transfer by the lessee of the right of lease to use to the third party during lease validity;

8) hire – special type of lease when lessor is person which is constantly performing business activity in the form of short-term (hourly) leasing for a fee in use of stock, other property of consumer appointment.

2. In this Law other concepts are used in the values determined by civil and other legislation of Turkmenistan, and also the relevant articles of this Law.

Article 2. Legislation of Turkmenistan on lease

1. The legislation of Turkmenistan on lease is based on the Constitution of Turkmenistan and consists of this Law and other regulatory legal acts of Turkmenistan.

2. The property relations arising from lease agreements are regulated by this Law. Regulations of the civil legislation of Turkmenistan are applied to the property relations which are not regulated by this Law.

3. This Law does not govern the relations arising from agreements of leasing, lease of special rooms or safes which are in them for document storage and values, and also other property intended for special needs which use in civil circulation is not allowed or limited to the legislation of Turkmenistan.

Article 3. Object of lease

1. Any personal and real estate and (or) thing, property rights, the having value terms belonging to the owner including the earth and other isolated natural resources, except for the property specified in part two of this Article can be object of lease.

2. Money and securities, exclusive right for results of intellectual activities cannot be object of lease (intellectual property), and also property which finding in civil circulation is not allowed or limited to the legislation of Turkmenistan.

Article 4. Subjects of the rent relations

1. Subjects of the rent relations are the lessor and the lessee.

2. Persons authorized by the legislation of Turkmenistan can also be lessors or the owner of property to lease property.

Article 5. Associations of lessees

Lessees have the right to form on a voluntary basis associations, the unions, consortia, concerns and other associations, to finance their activities and to leave freely them according to the accepted charters (provisions). These associations can include any collectives and citizens irrespective of the patterns of ownership operating on their production. In return, lessees have the right of entry into any associations if the last agree to such occurrence.

Chapter II. Regulation of the rent relations

Article 6. Lease agreement

1. The basis of origin, change and termination of the rent relations is the lease agreement signed by the lessor and the lessee on the basis of voluntariness and equality of participants.

The lease agreement is signed in writing, except for the agreement of the hire signed according to part four of article 11 of this Law.

According to the lease agreement the lessor shall provide to the lessee certain property for the stipulated payment in temporary use for independent implementation of economic activity or other purposes according to the legislation of Turkmenistan.

The lessee shall use leased property in accordance with the terms of the lease agreement, purpose of property and to pay to the lessor the rent stipulated by the lease agreement.

2. In the lease agreement are specified the following:

1) name, legal address and details of the parties of the agreement;

2) name, parameters, structure, quantity, cost, location of object of lease and purpose of use of object of lease;

3) procedure and conditions of transfer of the leased property, lease terms;

4) amount of the rent, procedure and terms of settlement;

5) procedure and conditions of prolongation and (or) change of term, change and termination of the contract of lease;

6) rights, obligations and responsibility of the parties, including:

a) to transfer obligation of the lessor to the lessee the property suitable for use on the purpose established by the agreement and to warn the lessee about the third party rights to the property leased;

b) obligation of the lessee to return leased property to the lessor after termination of the contract in that condition in which he received it, taking into account the ordinary wear and tear caused by lawful use;

c) distribution of obligations on operation and repair of leased property between the lessor and the lessee;

d) in the cases established by the legislation of Turkmenistan to insure leased property;

e) procedure the lessor of control of condition of the leased property;

7) other lease term can be provided by the lease agreement.

3. The obligation of the lessee to realize to the lessor fully or partially the fruits received by it in nature (products, works, services), or to transfer them to the lessor on account of the rent can be provided by the lease agreement if it is stipulated by the agreement.

4. The lessee according to the lease agreement independently determines the directions of the economic activity and disposes of products made by it and the gained income.

Outside obligation fulfillment according to the lease agreement the lessee is completely free in the economic activity.

5. After lease termination of the contract, made by the lessee with the consent of the lessor at the expense of own means:

1) inseparable improvements of leased property are subject to compensation to it the lessor if it is provided by provisions of the lease and does not lead to deterioration in its validity;

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