This article considers the lease issues German manufacturers face when setting up service centres in Iraq that need heavy foundations, lifting equipment and specialised electrical connections. An ordinary office lease does not address the right to install machinery, landlord access, or what happens to equipment and improvements when the lease ends, and the answers under Iraqi law are not always intuitive.
The relevant framework includes the Iraqi Civil Code No. 40 of 1951, which contains detailed rules on leases, alterations, improvements and the tenant’s obligations on exit; the Real Estate Registration Law No. 43 of 1971, which governs title and registered rights over land; the Real Estate Rent Law No. 87 of 1979, which may apply to certain properties within municipal boundaries; the Protection and Improvement of the Environment Law No. 27 of 2009; and the Civil Defence Law No. 44 of 2013 for fire safety requirements. Municipal authorities and the Real Estate Registration Directorate are commonly involved.
Verifying the premises and the landlord’s authority
Before negotiating fit-out rights, the tenant should review the title deed and confirm that the lessor has authority to grant the lease and permit structural works. Co-ownership is common in Iraq, and a lease granted by one co-owner may not bind the others for long terms or alterations. Existing leases, mortgages or state ownership can also restrict what the lessor can offer, and leases of state property follow their own procedures.
The permitted use of the land should support a service centre rather than only storage or offices. Zoning, municipal, environmental and civil defence requirements should be checked for the actual operation. A landlord’s consent does not replace an official approval, and a business licence does not create a right to occupy a particular property.
Separating machinery from permanent improvements
The Civil Code distinguishes between what the tenant may remove at the end of the lease and improvements that remain, and it gives the landlord certain options where the tenant has built or planted on the property. The lease should therefore identify which installations remain the tenant’s property and what the parties intend at expiry. Machinery bolted to a purpose-built foundation raises different issues from portable diagnostic equipment.
The installation schedule should identify:
- Equipment owned by the tenant or a financing company.
- Foundations, cabling and structural works requiring prior consent.
- Responsibility for technical and governmental approvals.
- Maintenance, insurance and damage caused by installation or use.
- Items to be removed, left in place or compensated at the end.
Photographs, drawings and an agreed inventory support those distinctions. A broad clause stating that all additions belong to the landlord can defeat the tenant’s expectation of recovering expensive equipment.
Protecting operational access
The lease should cover access routes, loading rights and operating hours compatible with a service business. Shared yards and entrances require particular attention where equipment moves by crane or heavy vehicle. It should be clear who controls gates and what notice is needed for deliveries, emergency repairs and utility work.
Landlord inspection rights should be defined by purpose, notice and supervision. Confidential customer equipment and hazardous areas may justify access protocols, but these must still allow lawful inspections by authorities and genuine emergencies. The landlord should not be able to interrupt agreed use whenever another occupier asks or a commercial disagreement arises.
Registration and duration
Longer leases, and leases intended to be relied on against subsequent purchasers or creditors, should be considered for registration with the Real Estate Registration Directorate where the law permits. An unregistered lease may protect the tenant against the landlord but give weaker protection against a new owner. Renewal options should be drafted carefully, since a vague promise to renew on terms to be agreed may not be enforceable.
Negotiating exit rights before installation
Removal provisions should treat ordinary expiry and early termination separately, set a dismantling period with continued access, and allocate responsibility for making good damage. If the landlord keeps agreed improvements, the lease should say whether compensation is payable and how it is calculated, rather than leaving the result to the Civil Code’s default rules or to assumptions about who funded the works.
Where machinery is financed, the owner or lender should be involved in arrangements affecting inspection and removal. A private access promise remains subject to third-party rights and enforcement procedures. If the landlord withholds possession or equipment, the appropriate court remedy, including urgent applications, should be pursued rather than forced entry or unilateral removal.
Disputes with landlords and recovery of premises
Lease disputes in Iraq are usually decided by the courts of first instance where the property is located, and some eviction or rent matters may follow specific procedures. Tenants should keep evidence of rent payments, notices and the condition of the premises throughout the term, since disputes on exit often turn on documentation. Where a landlord threatens to cut utilities or block access to pressure the tenant, urgent applications to the court can be considered. Equally, a tenant that remains in occupation after expiry without agreement may face claims for compensation, so the timing of dismantling and handover should be planned well before the lease ends.
Conclusion & how Etihad Law Firm can help
A service centre lease is part of the investment, not just an administrative step. As Iraq real estate transaction lawyers for German companies, Etihad Law Firm verifies title and landlord authority, negotiates leases that cover installation, access and removal, and advises on registration and permits, so that German manufacturers understand their rights before committing to substantial premises expenditure.