Upon expiration of the lease term, the parties may renew the lease contract; however, the agreed lease term shall not exceed twenty years from the date of renewal.” It can be seen that, unless otherwise specified by law, the maximum term of a fixed-term lease contract shall not exceed twenty years.
If the parties agree to automatically renew the lease contract for a period of 20 years after its expiration when they conclude the lease contract, such an agreement is invalid due to the intention to circumvent the limitations of the Civil Code on the maximum lease term of the lease contract.
The agreement that “automatically renews the lease for 20 years upon expiration” should be deemed invalid.
When the lease relationship terminates, the lessee should return the leased item to the lessor.
Q The parties agree that the lease contract has a lease term of 20 years, and the lease will be automatically renewed for 20 years upon expiration.
The reasons are as follows: Firstly, the person transferred by the lessor to the lessee in the lease contract is only a creditor’s right to use the proceeds.
Is this automatic renewal agreement valid? The lease term refers to the duration of the lease contract.
If the lease term exceeds twenty years, the portion exceeding the term shall be invalid.
Limiting the maximum duration of a fixed-term lease contract helps the parties to the lease contract adjust the terms of the transaction in a timely manner.
Finally, if the parties agree on a lease term of 20 years and intend to continue the lease contract, the lease contract may be renewed before or at the expiration of the term of the term lease contract, but new term leases are still subject to a maximum term of 20 years.
Secondly, the rights and obligations of the parties to a lease contract depend on the agreements between the parties, but the parties’ ability to foresee is ultimately limited, and the principle of strict adherence to the contract makes it extremely difficult to modify the lease contract.
In practice, the parties sign a lease contract that stipulates a lease term of 20 years and automatically renews the lease for 20 years upon expiration.
Article 705 of the Civil Code stipulates: “The lease term shall not exceed twenty years.
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If the lease contract is allowed to exist for a long period, the general leased item will be completely consumed, which will inevitably affect the return of the leased item, contrary to the original intention of the lease transaction.
