Commercial lease sublease
Verified 30 September 2022 - Directorate for Legal and Administrative Information (Prime Minister), Ministry of Economy
The subletting of a commercial premises is done for the tenant (called principal tenant) to make available to another person (called sub-tenant(b) all or part of the premises which he rents in exchange for payment of rent. Subletting of the commercial lease is in principle prohibited. However, it may be authorized by the owner (or lessor).
Subleasing a commercial lease is possible when 2 conditions are met:
- The lessor has given permission.
- The lessor is aware of the conditions of the sublease.
Warning
If these two conditions are not met, the lessor may refuse to renew the main lease agreement or the terminate.
Lessor authorization
Subleasing of the commercial lease by the lessee must be authorized by the lessor.
This authorization may take one of the following forms:
- She may be written. This is the case when it is included in the original commercial lease. It is also possible to write a agreeable commercial lease or mail. In the event of renewal of the commercial lease, the sublease authorization must be reproduced in the renewed lease agreement.
- It can be unspoken, where it results from clear and unequivocal attitude of the lessor. For example, an express authorization given by the lessor to the sub-lessee to carry out work constitutes tacit agreement of the sub-lease.
FYI
The landlord has 2 years to request a rent revision from the day on which he becomes aware of the price of the sublease.
Information on sublease terms
The tenant duty to inform the lessor its intention to sublease even if the sublease is authorized by the lease agreement. It does so by an act of Commissioner of Justice (formerly a bailiff) or by registered letter with acknowledgement of receipt.
The lessor has 15 days to answer. In the absence of a reply from the Commission, its consent shall be deemed to have been given.
This information obligation enables the lessor to be aware of the conditions of the sublease and of the identity of the sublessee. He can sometimes ask his tenant for an increase in rent. In fact, when the rent of the sublease is higher than the amount of the main rent, the lessor can claim from the main tenant an equivalent rent increase.
In the event of disagreement on the amount of rent, the court of the place where the commercial premises are located shall have jurisdiction to determine the rent.
Who shall I contact
Please note
The lease agreement may relieve the tenant from having to inform the landlord of his intention to sublease.
The sub-lease agreement is signed between the principal tenant and the sub-tenant.
It shall contain the following particulars:
- Description of sub-leased premises
- Allocation of sub-leased premises (i.e. the activity carried out)
- Sublease Rent
- Burden sharing between tenant and sub-tenant
- Rules of liability of sub-lessee and lessee to lessor
- Duration of the sublease. In general, it does not exceed the time remaining for the main lease.
The sublease has different consequences for the primary tenant and the subtenant.
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For the primary tenant
The principal lessee must comply with the terms of the commercial lease agreement with the lessor. He must therefore paying rent to the landlord. For his part, he receives rent from the subtenant.
It is also liable to the lessor if the sub-lessee fails to comply with the terms of the lease. For example, if the sub-tenant has damaged the premises, the lessor may seek compensation from the principal tenant.
For the sub-tenant
The sub-tenant must pay the rent subletting directly to the principal tenant.
He has the same rights as the principal tenant. The principal tenant cannot therefore grant the sub-tenant rights that he does not have. For example, unless expressly authorized by the lessor, the sub-lessee must comply with the destination of premises established in the main lease contract.
Please note
There is no contract between the landlord and the sub-tenant. However, if the landlord is not paid by his principal tenant, he can ask the sub-tenant to pay the rent for the sub-lease.
When the sub-lease ends, the sub-lessee can request the renewal of his lease. The rules are different depending on whether the main lease is still in progress or completed.
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The main lease is in progress
The sub-lessee must request the renewal of its sub-lease agreement from the principal lessee.
The renewed sublease will terminate at the same time as the main lease.
Example :
For example, if there are only two years left before the end of the main lease, the principal tenant will normally only be able to renew the sublease for two years.
The principal tenant may refuse the renewal of the sublease. Where the person refuses the renewal for a serious and legitimate reason (e.g. non-payment of rent), the person does not have to pay of eviction pay to the sub-tenant. In other cases, he will have to pay for it.
The main lease is complete
When its primary lease is completed, the primary tenant cannot renew the sublease. If the sub-lessee wishes to remain in the premises, he must therefore apply directly to the lessor for renewal of his sub-lease contract. We're talking about direct right to renewal.
Total subleasing
In this case, the principal tenant subleases the total premises.
He no longer exploits the goodwill. He therefore loses the right to renewal of its commercial lease, since only the owner of a commercial property benefits from this right.
It is the sub-lessee who becomes the owner of the business and who benefits from the right to renewal. He has to apply for the renewal of his lease to the principal tenant. It can only be accepted if the lessor has agreed to renew the main lease.
Partial subleasing
In a partial sublease, the primary tenant subleases part of the commercial premises and continues to operate the other part.
The rented premises may be separated. They're said to be divisible. For example, a restaurant owner subleases part of his business premises to a grocery store with the agreement of his landlord.
The principal tenant may apply for renewal of his lease only for the part of the premises in which he operates his business. The sub-lessee may apply for renewal of his lease directly to the lessor.
The principal tenant and the sub-tenant each apply for renewal for the part of the premises where they operate their business.
Please note
When the rented premises cannot be separated (they are then indivisible), the sub-lessee must request the renewal of its sub-lease from the principal lessee.
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