There are two main laws in Monaco, which regulate real estate lease, the Law 887 and Law 1291. Their application field is not wide. Nevertheless, if you are planning to buy real estate in order to lease it to the third party or you are interested to lease it personally, you should get to know the following laws, so that to be informed about your rights and obligations in that case. These laws concern just lease issues, but not purchase and sale deals.
If you buy an apartment in Monaco that is under the Law 887, you have a right to lease it just to the following individuals:
• relatives (or their conjoints) of the owner (or his husband/wife) in the line of ascent or descend;
• citizens of Monaco;
• individuals, residing in Monaco for more than five years and working there for more than six months;
• individuals, working in Monaco for more than five years.
Lease contract must be concluded for the period of 6 years. It can be terminated at the end of each year, solely at the leaseholder’s initiative. There is no limit of rent, so it can be fixed of your own choice. An additional clause about rent indexation, according to the index, used in similar cases in the Principality, can be included in lease contract as you wish.
The Law 1291 concerns only dwelling houses that were built till 1st September 1947. In comparison with the Law 887, according to the Law 1291, rent is limited and can be fixed just by Housing Administration. It is authorized to lease this type of real estate just to the following groups of people in the order of the following priority:
• citizens of Monaco;
• individuals, born from Monegasque parents; conjoints, widowers/widows of Monegasque citizens; individuals, divorced from Monegasque citizens; parents of children, born from that union;
• individuals, born in Monaco and residing there since birth, provided that one of their parents was a resident in Monaco at the time of their birth. Individuals, meeting all the conditions, but born, by chance or because of medical reasons, as a rule, outside the Principality, may be exempted from the requirement to be born in Monaco;
• individuals, residing in Monaco without interruption not less than forty years.
According to the order of priority, citizen of Monaco will have advantage over a person, residing in Monaco for more than 40 years. Thereby, citizen will have a preferential right to lease an apartment. Lease contract must be concluded for the period of 6 years with the option of termination at the leaseholder’s initiative.
The lessor can give to the leaseholder a term, free of rent, under the following conditions:
• pulling down of the old building in order to construct on the same lot a new one with the same or superior living floor space;
• superstructure of the building;
• reconstruction of the building for the extension of existing living floor space;
• work of improvement of living conditions (hygiene, health) and social safety.
In case of the last three conditions, the totality of premises, occupied by the leaseholder, is recognized as uninhabited for the period of work.
In the cases, mentioned above, as well as in the case, when the totality of premises, occupied by the leaseholder, is not recognized as uninhabited for the period of work, regulations of the Article 1.564 of Civil Code are applied. Moreover, in the case, when the building is subject to pulling down according to the conditions, indicated in regulations or effective legislation, or in the case, when the building is recognized as detrimental to health and can go to ruin, lease contract currently in force is subject to termination.
An additional clause about rent indexation, according to the index, used in similar cases in the principality, can be included in lease contract as you wish.
Nevertheless, annual rent cannot overdraw an average amount of Consumer Price Index (except tobacco goods), calculated for the totality of households (all France) for the four terms period and published by French State Institute of Statistics and Economical Analysis.