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Commercial Lease Agreement

Verified 01 January 2023 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice

A commercial lease is a lease of a premises in which a commercial, industrial or craft activity is carried out. The premises must be used for the operation of a trade fund. By signing a commercial lease, the tenant and the owner automatically benefit from a set of rules called the status of commercial leases.

The status of commercial leases is a set of rules that automatically applies to the commercial lease agreement.

It allows the tenant to benefit from various advantages: the right to renewal of lease after 9 years, the payment of predatory allowance in the case of non-renewal or rent review every 3 years or according to mobile scale clause.

For the status of the commercial lease to apply, the following 4 conditions must be met:

  • Lease Agreement
  • Concerning a building or premises for commercial, craft or industrial use
  • Operation of a trade fund in the premises
  • Registration of the lessee of the lease RCS: titleContent or RNE: titleContent

The status of commercial leases applies alsoconditions educational institutions, community services operating on a regular basis, public companies and Epic: titleContent and certain cooperative businesses.

Lease Agreement

It is characterised by the obligation of the landlord to make available to the tenant a space for commercial use. In return, the tenant pays rent. This is a commercial lease.

In order to operate a commercial or craft activity, it is possible to conclude a contract other than the commercial lease. It can be a seasonal rental contract or derogatory lease (or short-term lease).

FYI  

The professions cannot sign a commercial lease. Since their activity is not commercial, they have to sign a professional lease.

Building or premises for commercial use

The lease agreement must relate to a "building" or "premises" that is a building of a stable and permanent character. The tenant must have the assurance that he can remain in possession of the rented premises for the duration of the contract, without the owner (also called landlord) can move it at will.

The conclusion ofa commercial lease is only possible if the local is commercial use, i.e. assigned to the pursuit of a commercial, craft or industrial activity:

  • Activity commercial is defined by the performance of acts of trade as the purchase of goods for resale. The sale of clothing, books or food products are commercial activities.
  • Activity handcraft is an independent professional activity in the production, processing, repair or provision of services. Hairdressers, chocolatiers or butchers are craft activities.
  • Activity industrial is defined here as a raw material processing activity (e.g., wood, paper, electronics).

FYI  

A living room can be rented to a shopkeeper if transformed into a commercial. To do this, you have to apply for a change of use authorisation from the town hall of the town where the local is located.

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Operation of a trade fund

The status of commercial leases applies if a trade fund is operated at the premises. The fund must be owned by a merchant or company registered in RCS: titleContent or RNE: titleContent.

The trade fund shall be composed ofbody elements (equipment and tools, goods) and of intangible elements (clients, trade name, sign, leasing rights, patents and other industrial property rights).

The existence of clientele the fundamental element is the trade fund. The clientele is made up of the people who come to buy goods from the merchant because of his skill, his know-how and the products or goods he sells.

However, the tenant can choose to exploit its trade fund by leasing. In this case, the lessee of the lease retains the right to renew the commercial lease and the tenant-manager does not benefit from it.

The fund shall be operated from effectively, that is to say, in a real, regular way and in accordance with the purpose of the lease.

To benefit from right to renew commercial lease, the trade fund must have been effectively operated in the 3 years preceding the expiry of the lease or its extension.

Registration of tenant

Tenant must be registered to RCS: titleContent or RNE: titleContent. However, this condition is necessary to obtain renewal of the lease at maturity.

Registration in the Trade and businesses Register or the NIS must be made by all persons who exercise commercial activity.

Registration in the trades and crafts sector is compulsory for natural persons or businesses who are engaged in a craft activity and who employ no more than 10 employees.

If more than one tenant operates the trade fund, each tenant must be registered with the RCS or the RNE.

There is no mandatory form for the conclusion of a commercial lease.

The verbal lease is possible. It is subject to the status of commercial leases and has a minimum term of 9 years.

In practice, the commercial lease established in writing provide evidence of the existence of the contract and clearly define the obligations of each party.

The written lease shall be established either on a medium paper or on a stand electronic.

The commercial lease must be written by a notary (we are talking aboutauthentic act) in the following 2 cases:

  • The lease term exceeds 12 years.
  • The lease is for a drinks outlet, i.e. a bar, a restaurant, a supermarket, a grocery store or a wine merchant.

Mandatory particulars

When commercial lease, it must contain certain elements (this is called mandatory provisions of the statute of commercial leases).

These are the following:

  • Right to renewal of lease
  • Minimum duration of lease (9 years) and duration of renewed lease
  • Possibility of early resolution of lease by the tenant who has applied for his or her pension rights or for a disability pension
  • Scheme desspecialisation to request a change of activity during the lease
  • Rent Review : either triennial or based on an indexing clause
  • Amount charges, taxes
  • Regulation on security deposit : the landlord must pay the tenant interest when the security deposit exceeds 3 or 6 months rents
  • Implementation of a resolution clause
  • Terms and Conditions for Leave and Termination of Commercial Lease
  • Terms and conditions for requesting renewal of the lease
  • Assignment of Lease : the contract cannot provide for a clause prohibiting the tenant from ceding its lease.
  • Recovery and court settlement : the contract cannot provide that the lease is automatically terminated in case of collective proceedings
Freedom of the parties

Apart from the mandatory clauses and particulars, the parties are free. They may, for example, agree on the following:

  • Subletting: the lessor may authorise the subletting
  • Fixing the rent: the parties together fix the amount of the initial rent
  • Activities carried out in the premises (called destination of the rented premises): the activity indicated must be respected by the tenant. In order to effect a change of activity during the lease, the tenant must follow the desspecialisation. If this procedure is not followed, the landlord may decide not to renew the lease without paying the tenant a compensatory sum.

FYI  

There is a lease all shops which allows you to carry out all activities in rented places.

The owner (also called lessor shall attach to the commercial lease agreement the following documents:

  • Site Status
  • Environmental Annexe for surfaces ⩾ to 2000 m2
  • Inventory of expenses, taxes, taxes and royalties provided by the owner related to the lease concluded or renewed since November 5, 2014
  • List of works completed for 3 years and those planned for 3 years

FYI  

The technical diagnosis of asbestos is not mandatory but must be kept up to date and made available to the tenant by the owner of the premises.

Site Status

The inventory must be attached to the lease agreement. It obligatory when entering the premises. An inventory of the premises must also be drawn up when the premises are returned, when the commercial lease right, transfer or transfer free transfer of trade fund in the context of a donation or an estate

It shall accurately present the condition of each part and the equipment contained in the commercial premises.

It is written amicable by the landlord and the tenant (we are talking aboutcontradictory situation) or by a third party authorised by them.

If the parties cannot reach agreement, an inventory shall be drawn up by the Commissioner of Justice (former judicial officer and auctioneer).

The rule that "the tenant shall be presumed to have received the premises in good condition for rental repairs if there is no inventory" does not apply to the landlord who has refused to establish a inventory.

FYI  

for leases concluded before 20 June 2014, an inventory shall be drawn up when the premises are returned only if an inventory has been carried out at the time of taking possession.

Environmental Annexe (or Green Annexe)

A commercial lease covering a space of more than 2,000 square metres for office or commercial use must include an environmental annexe.

An environmental annexe (said green annexe) contains the following information provided by the owner:

  • Description of the energy characteristics of the equipment and systems of the building and of the rented premises (waste treatment, heating, cooling, ventilation, lighting...)
  • Annual consumption of water and energy of these equipment and systems
  • Annual amount of waste generated

This Annexe may provide for obligations to limit the energy consumption of premises.

Several objectives may be included in the green annexe. For example: maintenance work, water consumption reduction plan, greenhouse gas emission reduction.

Energy Performance Diagnostic (DPE)

The DPE shall be joined by the lessor when the commercial lease is concluded.

It is a document that has the following elements:

  • Amount of energy actually consumed or estimated
  • Greenhouse gas emissions for standardised use of the building or part of a building
  • Information on ventilation or ventilation conditions.

Natural and Technological Hazard Report (NERT)

TheERNT concerns real property located in areas covered by a plan for the prevention of foreseeable technological risks or natural risks.

This document must be attached to the commercial lease and must be less than 6 months old.

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