Adding or changing business in a commercial lease

Verified 03 May 2024 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice

The activity carried out in a commercial premises must correspond to that indicated in the commercial lease. If the tenant wishes add or change activityHowever, it must obtain the agreement of the owner and respect certain rules. A tenant who does not comply with these rules is subject to a refusal to renew or to the termination of the commercial lease.

Adding an Activity

The lessee may add to the activity provided for in the commercial lease one or more other activities, provided that these activities are related or complementary. We're talking about partial de-specialization.

  • One related activity is an activity closely related to the activity already carried out. For example, the sale of ready meals is considered to be related to the main activity of selling cold cuts.
  • One complementary activity is that which is necessary for a better exercise of the principal activity. For example, selling food products at a gas station.

Example :

Meal shops are considered as related activities because they are normal extensions of the activity in the following cases:

  • Sale of food products in a petrol station
  • Sale of wines, eggs, sausages and chickens in a seasonal fruit and vegetable trade.

On the other hand, the food shops are not related activities in the following cases:

  • Sale of confectionery, chocolates, ice cream for the baker's activity.
  • Sale of pancakes for a growing activity, briocherie, viennoiserie.

Before any activity is added, the tenant must notify the owner by registered letter with request for acknowledgement of receipt (RA) or by act of commissioner of justice (formerly a bailiff) of his intention to add an activity. We're talking about partial de-specialization.

Such prior notification shall not constitute an application for authorization. The owner is under no obligation to respond

FYI  

If the landlord is not informed of the addition of a new activity, the landlord may terminate the commercial lease or refuse the renewal of the lease (without payment of an eviction fee).

The owner has 2 months for challenge the tenant's project from the receipt of the act of the Commissioner of Justice or the registered letter with AR.

He is not required to respond in any particular form: he can do so by registered letter with AR, but it is not mandatory.

FYI  

After the 2-month period, the owner can no longer contest the addition of the activity. Sound lack of response within the two-month period shall mean acceptance of the project.

The tenant can then to bring proceedings before the court of justice for recognition of the related or complementary nature of the proposed new activity.

Who shall I contact

FYI  

In the event of a dispute by the landlord, the tenant cannot expand his activity until the court has ruled.

The court then determines whether the activity is related or complementary, taking into account the evolution of commercial practices but also technical progress. The evolution of commercial practices can be established by certificates from the professional chambers: chambers of trades and crafts (CMA) and chambers of commerce and industry (CCI).

In order to recognize the related or complementary nature of an activity, the court may also use the client identity of the activities. This is the case, for example, with the sale of newspapers and confectionery in a bar-tobacconist's shop, as long as the service is provided to customers.

Adding a related or complementary activity does not result in an immediate rent increase.

This may occur during the triennial rent review that follows the activity extension notification. The landlord can increase the rent if the added activity has itself resulted in a change in the rental value rented places.

If the tenant considers that the increase in the new rent is too high, he has the possibility to withdraw by waiving his rights until the expiry of a period of 15 days from the date on which the decision became final. In this case, he must send the owner, by act of Commissioner of Justice, his waiver and bear all costs relating to the dispute

Change of activity

The tenant may be authorized to be exercised in rented premises 1 or more different activities those originally provided for in the commercial lease. We're talking about total or full de-specialization.

The tenant can make a change of activity if he fills out all of the following conditions :

  • The new activity proposed by the tenant corresponds to economic developments (for example, an economic crisis affecting the tenant’s industry).
  • The new activity responds to the rational organization of distribution. For example, there is the interest in creating another activity in relation to existing businesses and the needs of customers. The transformation of a dry cleaner into a restaurant in a very touristy area is justified in view of the constant decline in the financial results of the dry cleaner.
  • The new activity is compatible with the the purpose, characteristics and location of the building. Where the premises are situated in a condominium, it must be verified that the proposed activity is not prohibited by the condominium regulation. Furthermore, the new activity must not cause any harm to the neighborhood. Thus, the transformation of a furniture business into a fast food bar business generates various noises and nuisances that can disturb the living conditions of the occupants of the building.

The tenant must therefore demonstrate that, in view of the changing economic situation and the requirements of rational distribution organization, the activity carried out is inappropriate and that the new activity is necessary.

Please note

The first lessee of a premises included in a shopping center may not use the full de-specialization procedure for 9 years from its entry into use.

Request for prior authorization from the owner

If the tenant considers that he meets the conditions to change his activity, he must request a prior authorization to owner by act of commissioner of justice or by registered letter with AR.

The application shall include an indication of the new activity or activities envisaged.

FYI  

If the tenant uses the registered letter with AR and it could not be delivered to the landlord, the procedure must be renewed by an act of commissioner of justice.

Information of creditors registered on the goodwill

The tenant must also notify, by act of commissioner of justice or by registered letter with AR, creditors having a privilege registered on the goodwill. The change in the business of the goodwill may affect the rights of these creditors. They can then claim additional guarantees on the basis of the risks associated with the new activity.

These creditors registered on the goodwill have a period of 3 months to answer the tenant. This response is sent by the act of the Commissioner of Justice or by registered letter with AR.

Failure by the creditors to respond shall be deemed to be acceptance of the change of business.

In the 3 months upon receipt of the request for a change of activity, the owner shall reply by act of commissioner of justice or by registered letter with acknowledgement of receipt.

It has 3 possibilities:

  • Accept Transformation
  • Oppose the conversion, stating the reasons for its refusal
  • Give consent under certain conditions (e.g. rent increase, performance of certain works)

FYI  

If the landlord does not respond, the landlord is deemed to have accepted the new activity(ies) proposed by the tenant.

Where the owner has made a commitment to his other tenants not to lease the business for the same activity as they are engaged in, he must inform them. He has a one-month deadline from the request of the tenant. He/she shall forward this information by an act of the Commissioner of Justice or by registered letter with AR.

The tenants then one month to let the owner know what they think about this change.

If the other tenants fail to reply, it is acceptance.

The owner may object to the change of activity in the following cases:

  • Grave and legitimate reason: for example, it may refuse the conversion of a clothing trade into an oriental food trade where this may cause nuisance in the vicinity with sidewalk congestion.
  • Non-compete commitment vis-à-vis other tenants when it rents several goodwill. The owner may refuse the change of business if another of his tenants with whom he has signed a non-compete agreement, is engaged in the same activity.
  • Sound Exercise right of take-back (e.g. in case of reconstruction of the existing building or elevation of the building or urban renewal works)

However, if the owner's refusal is not justified by a serious and legitimate reason, the court may authorize the change of activity.

Who shall I contact

The owner who has accepted the change of activity may, in return, ask his tenant for a rent increase and this without waiting for the triennial review.

The change of activity may also result in the payment of a de-specialization allowance. This compensation is paid to the owner to compensate for any damage. For example, it may be a loss related to the decrease in rents of other tenants due to the disturbance of enjoyment caused by the new activity.

Warning  

In the event of a change in use of the business premises, the owner must make a declaration for a review of his rental value at the tax office (SIE).

Declaration of premises for commercial or professional use (form No 6660-REV)

FAQ