Lease is a legal institute regulated by the Obligations Act (Official Gazette Nos. 35/05, 41/08, 125/11, 78/15, 29/18, 126/21, 114/22, 156/22, 145/23, 155/23; hereinafter: OA).

By a lease agreement, the lessor undertakes to deliver a specific thing to the lessee for use, while the lessee undertakes to pay the agreed rent.

From the statutory definition, it follows that a lease agreement is a consensual, bilateral, remunerative legal transaction.

The subject of lease can be movable or immovable property, and an essential feature of lease is that the thing is given for use, with the right to collect fruits (profits) from it.

The lessor is obliged to:

  • deliver the thing to the lessee in proper condition,
  • maintain the thing in proper condition during the lease term,
  • carry out necessary repairs at their own expense,
  • reimburse the lessee for urgent repairs which the lessee had to carry out themselves.

The lessor is liable for:

  • material defects of the thing, except for visible defects known to the lessee at the time of contract conclusion,
  • legal defects that exclude or limit the lessee’s right to use the thing.

The lessee is obliged to:

  • use the thing as a good manager / prudent owner,
  • use the thing in accordance with the contract and its purpose,
  • pay the rent in the agreed deadlines,
  • bear the costs of regular use,
  • return the thing after the termination of the lease in the state in which it was received, with ordinary wear and tear.

A lease agreement may be concluded:

  • for a fixed term (terminates at the end of the term),
  • for an indefinite term (terminates by notice).

A lease does not terminate upon the death of the contracting parties or alienation of the thing, but it terminates if the thing perishes due to force majeure.

Lease, besides being regulated by the OA, is also governed by special laws depending on the subject of the lease.

The lease of commercial premises is regulated by the Law on Lease and Sale of Commercial Premises.

Commercial premises include business buildings, rooms, garages, and parking spaces.

A lease agreement for commercial premises:

  • must be concluded in written form,
  • when the lessor is the Republic of Croatia or a local self-government unit, it must also be notarized by a public notary.

Commercial premises owned by the state or local self-government units are usually leased through a public tender, where the most favorable offer is considered the one with the highest rent, provided other conditions are met.

Lease terminates:

  • at the end of the period (for a fixed-term lease),
  • by notice (for an indefinite-term lease), respecting the prescribed notice period.

Lease of agricultural land owned by the Republic of Croatia is regulated by the Agricultural Land Act.

State agricultural land is leased via public tender:

  • for 25 years for permanent plantations,
  • for 15 years for other forms of production,
  • with the possibility of extension.

The lease agreement must be in written form, and in parts relating to the price and delivery of possession, it has the effect of an enforceable document.

Lease can be terminated, among other reasons, if the lessee:

  • does not pay the rent,
  • uses the land contrary to the contract or law,
  • does not act as a good manager,
  • subleases the land without permission,
  • does not fulfill the objectives of the business program.

Concession is a special public law institute by which public authority grants authorization to a specific subject for:

  • economic use of a general or other good,
  • execution of works,
  • provision and management of public services.

According to the current Concessions Act, a concession is acquired by an administrative agreement, concluded in written form and for a fixed term, based on a previously adopted decision on granting the concession.

Concession is based on:

  • Decision on concession – a unilateral and authoritative act of public authority
  • Concession agreement – which establishes a bilateral legal relationship

Without concluding the agreement, the decision alone does not create rights and obligations for the concessionaire. The decision and the agreement form an indivisible legal whole, whereby in case of inconsistency, the decision on concession prevails.

Types of concessions include:

  • concessions for economic use of general or other goods,
  • concessions for works,
  • concessions for services.

Concessions can be granted, among others, for:

  • maritime property,
  • energy,
  • transport, ports, and airports,
  • tourism, health, sport,
  • waste management,
  • exploitation of natural resources.

Concessions cannot be granted on forests owned by the Republic of Croatia, in defense and security areas, and on properties excluded by special regulations.

The procedure for granting concessions includes:

  • preparatory actions (feasibility study, value assessment),
  • public announcement of the intention to grant a concession,
  • receipt and evaluation of offers,
  • adoption of a decision on the concession,
  • conclusion of the concession agreement.

The decision on granting a concession is made by the competent public authority, and legal protection is available before the State Commission for the Control of Public Procurement Procedures.

Although lease and concession have certain common points, they are fundamentally different legal institutes:

  • lease is based solely on the contract, while a concession is preceded by an administrative decision,
  • lease can be concluded by any natural or legal person, while a concession can only be granted by public authority,
  • lease refers to the use of a thing, while concession encompasses activities of public interest,
  • concession is subject to strict legal restrictions and exclusion reasons for bidders.

Methods of terminating a concession include: fulfillment of statutory conditions, termination of the concession agreement due to public interest, unilateral termination of the concession agreement, final court decision declaring the concession agreement null or void, in cases specified by the agreement, and in cases specified by special law.

The grantor of the concession is obliged to deliver the concession agreement and its annex to the ministry competent for finance within ten days from the date of conclusion. Any change in the concession agreement must be reported to the ministry competent for finance within ten days from the date of the change. The grantor must report any change in obligations concerning the amount of the concession fee without delay to the ministry competent for finance.

The State Commission for the Control of Public Procurement Procedures is competent to decide on appeals regarding concession granting procedures.