During the performance of a lease agreement, an amendment to the lease term is a common need but may expose the parties to significant legal risks if it is not implemented in accordance with applicable laws. The following article clarifies the legal nature of such amendments, the applicable conditions, common disputes, and practical measures for safeguarding the lawful rights and interests of the parties when modifying the lease term.

I. Introduction to issues relating to amendments of lease term provisions

During the performance of agreements for the lease of houses, assets, or commercial premises, the parties may need to adjust the lease term due to changes in their intended use of the property or business circumstances. If amendments to the lease term are not clearly agreed upon or are not properly documented through a contract appendix in accordance with the law, disputes and legal risks may arise.

In addition to altering the expiration date of the lease agreement, such amendments may also affect the rental price, security deposit, termination rights, and other related obligations of each party. Thus, the parties should have a clear understanding of the applicable legal provisions and the conditions required for an amendment to the lease term to be legally valid.

II. Understanding amendments to lease term provisions

1. What is an amendment to the lease term, and how does it differ from a lease extension?

Pursuant to Article 474 of the Civil Code 2015, the lease term shall be determined by agreement between the parties. If no agreement is reached, the lease term shall be determined based on the purpose of the lease. If the lease term cannot be determined, either party has the right to terminate the lease agreement at any time, provided that reasonable prior notice is given to the other party. Accordingly, an amendment to the lease term refers to the parties' mutual agreement to modify the lease period specified in the agreement, including extending, shortening, or redefining the lease duration to meet their actual needs.

Current legislation does not separately regulate "lease extension" as an independent legal institution. In practice, a lease extension is merely a form of agreement to amend the lease term, usually entered into when the lease agreement is about to expire or has already expired, with the aim of continuing the leasing relationship between the parties. Thus, from a legal perspective, a lease extension is also regarded as a form of amendment to the lease term based on the parties' mutual agreement.

2. When may the lessor or the lessee propose an amendment to the lease term?

Pursuant to Articles 472 and 474 of the Civil Code 2015, a lease agreement is established based on the parties' agreement regarding the lease term. Accordingly, either the lessor or the lessee may propose an amendment to the lease term in the following circumstances:

  • First, while the lease agreement remains in force, if there is a change in the intended use of the leased property, its exploitation capacity, or the actual circumstances of either party, the parties may propose to revise the lease term, provided that the other party consents.
  • Second, if the agreement does not specify a lease term, or the lease term cannot be determined based on the purpose of the lease, either party may proactively propose adjusting or re-establishing the lease term in order to ensure stability in the performance of the agreement.
  • Third, before the lease agreement expires, either the lessor or the lessee may propose extending or shortening the lease period to continue or terminate the leasing relationship in accordance with their actual needs. In substance, it constitutes an agreement to amend the lease term and is not restricted by law, provided that it does not violate any mandatory legal provisions.

3. Is a written contract appendix always required for amending the lease term, or may the parties agree orally? Why?

Pursuant to Article 421 of the Civil Code 2015, the parties are entitled to agree to amend a contract; however, the amended contract must comply with the form required for the original contract.

In addition, Article 403 of the Civil Code 2015 provides that a contract may include appendices to elaborate on or amend certain contractual provisions, and such appendices shall have the same legal effect as the contract if agreed upon by the parties.

Based on these provisions, the following principles may be drawn:

  • If the original lease agreement was executed in writing (particularly residential lease agreements governed by specialized legislation), any amendment to the lease term must likewise be made in writing, typically in the form of a contract appendix or an amendment agreement.
  • If the original agreement was concluded orally (where the law does not require a written form), the amendment to the lease term may also be made through an oral agreement.

Although the law does not specifically regulate the form of amendments to the lease term, any amendment must comply with the form of the original contract. 

4. What risks should the lessee consider before agreeing to amend the lease term?

Under the general provisions governing lease agreements in the Civil Code 2015 (Articles 472 and 474), together with the principles governing contract amendments under Article 421, the lease term is determined by mutual agreement between the parties and may be amended with their mutual consent. Nevertheless, before accepting an amendment to the lease term, the lessee should carefully consider the following risks:

- Risk of concurrent amendments to other contractual terms: In practice, amendments to the lease term are often accompanied by changes to the rental amount, security deposit, payment conditions, or other contractual obligations. If the lessee fails to carefully review the amended provisions, they may inadvertently accept terms that are unfavorable.

- Risk of losing benefits due to a shortened lease term: If the lessee agrees to shorten the lease period, they may:

  • Not have sufficient time to recover investments made in renovations, repairs, or interior fit-outs.
  • Experience interruptions to business operations or daily living arrangements.
  • Incur unexpected relocation costs.

- Risk of compensation liability or contractual sanctions: Some lease agreements impose sanctions for early termination. If the lease term is amended without clearly addressing penalty provisions, the lessee may:

  • Be required to pay damages on the grounds that the agreement has been terminated prematurely.
  • Forfeit the security deposit.

- Risk arising from an unclear form of agreement: Pursuant to Article 421 of the Civil Code 2015, an amended contract must comply with the form of the original agreement. If the parties merely reach an oral agreement while the original contract is in writing:

  • The lessee may encounter difficulties in proving the agreed amendments in the event of a dispute.
  • The lessor may deny that any amendment to the lease term was ever agreed upon.

- Risk of increased rent or modified conditions upon extension: If the lease term is extended, the lessor may:

  • Increase the rental amount under the new agreement.
  • Revise the conditions relating to use, maintenance, or payment.

If the lessee fails to negotiate these matters clearly before agreeing to the extension, the leasing costs during the extended period may exceed their expectations.

III. Legal provisions governing amendments to lease term provisions 

1. How do the civil code and other legal instruments regulate amendments to the lease term?

Under the Civil Code 2015, the lease term is a contractual matter to be agreed upon by the parties in a lease agreement (Article 474). Accordingly, amending the lease term essentially constitutes an amendment to the contract and must be based on the mutual consent of the parties in accordance with Article 421 of the Civil Code 2015. Following such amendment, the contract must continue to comply with the form required for the original agreement.

 

With respect to residential lease agreements, the Law on Housing 2023 adopts the same principle. Specifically, Clause 1, Article 170 provides that the lessor and the lessee have the right to agree on the lease term, rental amount, and payment method. This provision confirms that the lease term is a contractual matter subject to the parties' agreement. Thus, any amendment to the lease term may only be made with the mutual consent of the parties and must ensure the lawful rights and interests of each party throughout the leasing relationship in accordance with Clause 3 of the same Article.

2. If an amendment to the lease term leads to a dispute, what is the statute of limitations for filing a lawsuit?

Pursuant to Article 429 of the Civil Code 2015, the statute of limitations for initiating legal proceedings to request the court to resolve a contractual dispute is three (03) years from the date on which the person entitled to bring the claim knows or should have known that his or her lawful rights and interests have been infringed.

Accordingly, if an amendment to the lease term leads to a dispute, the same general statute of limitations shall apply. The limitation period typically commences from the time when one party becomes aware that the amendment to the lease term has adversely affected or infringed upon its lawful rights and interests, for example, if the party is required to terminate the agreement earlier than expected, is denied the right to continue leasing in accordance with the previous agreement, or is subjected to obligations beyond those originally agreed upon.

3. Common violations when amending the lease term

The most common violations relating to amendments to the lease term generally arise from the parties' failure to comply with their original agreement or the legal requirements governing contract amendments. These include:

  • Unilaterally changing the lease term without obtaining the consent of the other party, contrary to the contractual principle that agreements are established by mutual consent under the Civil Code.
  • Failing to execute a contract appendix or written amendment if the law or the contract requires amendments to be made in writing, thereby leading to disputes concerning the validity of the amended agreement.
  • Implementing changes to the lease term without providing reasonable prior notice to the other party, thereby adversely affecting that party's lawful rights and interests.
  • Coercing or imposing unfavorable conditions on the other party to compel acceptance of the amended lease term, in violation of the principles of voluntariness and equality in the formation and performance of contracts.
  • Amending the lease term in contravention of contractual provisions prohibiting amendments or without complying with the procedures and conditions expressly stipulated in the agreement.

IV. Questions relating to amendments to lease term provisions

1. What are the common methods of amending the lease term?

Pursuant to Article 421 of the Civil Code 2015, the parties are entitled to agree to amend a contract, including provisions relating to the lease term, provided that such amendments do not violate any prohibitive provisions of law or contravene social ethics. In addition, Clause 3 of this Article stipulates that any amended contract must comply with the form required for the original contract.

Based on the foregoing provisions, amendments to the lease term are commonly implemented through the following methods:

  • Executing a contract appendix: Pursuant to Article 403 of the Civil Code 2015, a contract may be accompanied by an appendix setting out detailed provisions or amending certain contractual terms. Such appendix has the same legal effect as the principal contract.
  • Executing a written contract amendment agreement: The parties may enter into a separate written agreement specifically amending the lease term. Such document forms an integral part of the original contract and serves as its amendment.
  • Re-executing a new lease agreement: The parties may execute a new lease agreement to replace the existing one, in which the lease term is revised in accordance with their mutual agreement.

2. How should a provision prohibiting amendments to the lease term be handled?

If a lease agreement expressly prohibits amendments to the lease term, the resolution of such matter is governed by the principle of respecting the parties' contractual agreement under the Civil Code.

Pursuant to Articles 3 and 385 of the Civil Code 2015, a contract is an agreement between the parties, and its terms must be respected and performed as agreed. Accordingly, if the contract expressly provides that the lease term may not be amended, the parties are, in principle, obliged to comply with that provision.

However, under Clause 1, Article 421 of the Civil Code 2015, the parties retain the right to amend the contract by mutual agreement. Thus:

  • If both the lessor and the lessee mutually agree to amend the provision prohibiting changes to the lease term, they may execute a contract appendix or a written amendment agreement to revise the lease duration.
  • If only one party wishes to amend the lease term while the other party refuses to consent, the proposed amendment shall have no legal effect, and the proposing party must continue performing the contract as originally executed.

In case a party unilaterally changes the lease term in violation of the contractual prohibition, such party may be deemed to have breached the contract and may be liable for damages or other contractual remedies in accordance with the agreement and applicable law.

3. What conditions must be satisfied for an agreement amending the lease term to be legally valid?

An agreement amending the lease term is legally valid only if it satisfies all conditions for the validity of a civil transaction prescribed under Article 117 of the Civil Code 2015.

Specifically, an agreement amending the lease term must satisfy the following conditions:

  • The parties must have legal capacity and civil act capacity: Both the lessor and the lessee must possess the legal capacity and civil act capacity required to enter into and perform the transaction in accordance with law.
  • The agreement must be entered into voluntarily: The parties must mutually agree to amend the lease term based on their free will, without fraud, deception, threats, or coercion.
  • The purpose and contents of the agreement must be lawful: The amendment must not violate any prohibitive provisions of law or contravene social ethics, nor may it infringe upon the lawful rights and interests of the other party or any third party.
  • The required legal form must be observed: Pursuant to Clause 3, Article 421 of the Civil Code 2015, an amended contract must comply with the form of the original contract. Accordingly, if the original lease agreement was executed in writing, notarized, authenticated, or registered, the amendment to the lease term must likewise comply with the same formal requirements.

4. What are the legal consequences if the lease term is amended without prior notice to the lessee?

If either the lessor or the lessee unilaterally implements an amendment to the lease term without prior notice and without obtaining the consent of the other party, such amendment may be considered legally ineffective.

Under the principles of the Civil Code 2015, any amendment to a contract must be based on the mutual agreement of the parties. Accordingly, if one party unilaterally changes the lease term without the other party's consent, the amended provision may be deemed invalid under Article 407 of the Civil Code 2015 governing invalid contracts, which applies the provisions on invalid civil transactions set out in Articles 123 through 133 of the Civil Code.

If the contract or the amended portion thereof is declared invalid:

  • The amended lease term shall have no legal effect.
  • The parties must restore the original status quo or continue performing the original contract in accordance with its existing terms.
  • The party that unilaterally implemented the amendment may be liable to compensate the other party for any damages arising from the unauthorized amendment.

5. How does the law protect the lessee when the lessor unilaterally amends the lease term?

If the lessor unilaterally amends the lease term without the lessee's consent, the lessee's rights are protected under Article 428 of the Civil Code 2015 governing unilateral termination of contract performance.

Pursuant to Clause 1, Article 428 of the Civil Code 2015, a party is entitled to unilaterally terminate or alter the performance of a contract only where the other party has materially breached its contractual obligations, or where such right is provided by agreement or by law. Accordingly, if the lessor unilaterally changes the lease term without a lawful basis, such conduct constitutes a breach of contractual obligations.

Pursuant to Clauses 4 and 5, Article 428 of the Civil Code 2015, the lessee is entitled to:

  • Require the lessor to continue performing the lease agreement in accordance with the originally agreed lease term;
  • Claim compensation for damages if the unlawful amendment causes losses;
  • Unilaterally terminate the lease agreement and require the breaching party to bear civil liability.

V. Looking for a trusted legal expert to assist you with lease term amendments?

If you have concerns regarding amendments to lease term provisions and wish to minimize potential legal risks, NPLaw is a trusted legal partner you can rely on. NPLaw's lawyers provide comprehensive legal services, including reviewing lease agreements, advising on lawful amendment strategies, preparing legally compliant contract appendices, and representing clients in dispute resolution where contractual violations arise, thereby helping you protect your lawful rights and interests in a safe and effective manner.

The above information is provided for reference purposes only. Should you require detailed legal advice tailored to your specific circumstances, please contact NPLaw Firm for prompt professional assistance.