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. Last Updated: 07/27/2016

Moscow Office Lease: The Basic Ingredients

Moscow remains one of the world's most expensive office locations, reportedly pricier than Tokyo or London. Any tenant also must be wary of unusual legal requirements that could make even an expensive lease worthless.

1. Who is the landlord?

If the company offering office space for rent is a state-owned enterprise, Russian law does not permit it to sign the lease on its own. Either the federal or the local committee for property administration, the agency charged with overseeing privatization, must sign the lease. This requirement took effect on October 14, 1992, but purports to apply to leases concluded before this time which thus must be re-executed.

The law does not make clear what counts as a state-owned enterprise, but the best rule of thumb is whether it is more than 25 percent state-owned. Otherwise, the only requirement is that the landlord be either a registered entity or an individual.

2. Who owns the space?

Except in the case of state-owned enterprises, any landlord actually owning office space may rent it directly. Ownership is evidenced by a certificate of ownership issued by the Moscow city committee for property administration in the case of companies, or the city administration of housing privatization in the case of individuals. Some owners do not have this certificate, but it is preferable to find one that does.

If a landlord does not own the space, it may be rented only with the approval of the actual owner. This requirement applies even to a sublease from a landlord that has a lease from the owner. If the owner is the city committee for property administration, as most often is the case, city rules require that the sub-lease be registered with this committee.

3. How is the rent paid?

Rent may be paid only by bank transfer, never cash, and a Russian landlord may be paid rent only in a Russian bank, except in the unlikely event that he has permission from the Central Bank to be paid in an off-shore account. A non-Russian landlord may be paid in a foreign bank, although this landlord must be registered with the Russian tax authorities and pay tax on the rent.

Rent may be paid in foreign currency as long as both landlord and tenant are not Russian, but alternatively may be paid in rubles as long as the landlord is Russian and the tenant is either Russian or an accredited foreign company. Rent payments also must include value added tax in most cases.

A good lease should contain many more ingredients, but those described here are the minimum to put a lease on a solid legal basis.

Alexander Papachristou, attorney at White & Case, has practiced law in Moscow for four and a half years.