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  • Writer's pictureGábor Kirsch

Definite or Indefinite ?

In our article, we discuss the pros and cons of the two types of contracts to make the best decision when hiring.

Fixed - term lease

A special feature of this type is that the parties conclude the contract for a certain period of time, which can be a few months or a few years. At the same time as the term of the fixed-term lease expires, the tenant's right to reside in the property also ceases. To extend, however, we must enter into a new contract before or at maturity.

By renting out our apartment for a period of up to a few months or weeks as an owner, we can give ourselves the opportunity to ask for even higher rents.

(For example, renting an Airbnb apartment is expensive in the medium term, and long-term apartment renters provide accommodation for the medium term in a few cases. The rent can thus be included in short-term and long-term rents.)

A fixed-term lease may be terminated by extraordinary termination before its expiration, or, if the parties are covered by the contract, ordinary termination may be exercised.

Indefinite lease

The essence of a lease agreement of indefinite duration is that the parties do not specify in advance a minimum or maximum period of time for the validity of the contract. This option is great for those who insist on their flexibility as either an owner or a tenant. However, this type also has disadvantages:

* as an owner, as the contract provides flexibility not only for us but also for our tenant, so our permanent fixed income from the expense is not guaranteed,

* As a resident, however, it is precisely because of flexibility and uncertainty that we may find that landlords charge higher rents than when concluding fixed-term leases.

In this case, if there is no minimum rental period, the contract can be terminated at any time without notice.

Mixed contract

In many cases, we can come across a kind of hybrid solution in the real estate market, where the parties enter into an indefinite lease with a minimum term. In this case, the duration of the contract may also be stated in the contract: "the contract is for an indefinite period, but for a minimum of one year".

Mixed or so-called hybrid contracts can be a good solution for both parties because they can mitigate negative effects and strengthen positive ones.

In the case of mixed contracts, the landlord can give himself time to get to know his tenants better, but he is not bound by the unknown for several years, so he can dismiss his tenants with ordinary notice after the expiration of the fixed term. While your source of income is secured.

As a tenant, the advantage of this contract is approx. the same, it provides protection for the period until we get to know the owner and we don’t have to be very afraid of being suddenly unloaded from our apartment.

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