Commercial lease: what do you need to consider?

Last modified:

Thursday 31 October 2019

Concept

Firstly, ask yourself if the legislation relating to commercial leases applies to you. A commercial lease is the rental of a building used mainly for the exercise of a retail or artisanal trade by the lessee or by a sub-lessee in direct contact with the public.

The law on commercial leases governs this type of lease, and its application is imperative. 

Commercial lease length

When the law on commercial leases applies, the advantage for the lessee lies in the stability of their business capital:

  • A commercial lease must be concluded for a minimum of 9 years. A lease can be concluded for a longer period (in this case, the contract must be established in a notarial act). 
  • The lessee is entitled to 3 renewals, but this renewal must be requested by registered letter between the 18th and 15th months prior to the expiry of the lease. Therefore, we recommend the use of a calendar (long-term) to keep these dates in mind.  The lessor may accept (tacitly or expressly) the renewal of the lease, refuse this, or make a counter proposal. 

  Contract and registration

In order to avoid difficulties, it is preferable to conclude the lease in writing. In the 4 months following the conclusion, the parties must submit the contract to the registration authority where the building is located (in 3 copies), signed by both parties.

The respect of this condition protects the lessee by giving the lease an official value.

Rent revision

On the expiry of each three-year period, the parties have the right to ask the justice of the peace to revise the rent, provided that they prove that, due to new circumstances, the normal rental value of the property let is greater than or less than 15% of the rent determined in the lease or the last revision adopted.

Termination

The lessee may terminate the lease every three years by registered letter, or by writ by a court officer with six months' notice.

Termination is also possible without any notice, provided that a common agreement is made by means of a notarial act or by a declaration before the justice of the peace.

 In addition, the lessor, under certain conditions, may terminate the lease every three years with one months' notice.

Notification 

Are you a lessee? Do you want to make changes to the property rented, which may be useful to your company? In this case, it is a good idea to find out if the transformations comply with the conditions set out by the law. Therefore, you must notify the lessor by registered letter, and the cost of the works may not exceed three months' rent. You should also check the contract for any provisions concerning the cost of these works. Will you receive compensation for the work carried out at the end of the lease?

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