Derogatory lease (or short-term lease)

Verified 11 June 2024 - Directorate of Legal and Administrative Information (Prime Minister), Ministry of Justice

The derogatory lease (or short-lived) also known as precarious lease is a lease of up to 3 years in respect of premises used for the operation of a business. Commercial lease status rules (such as the right to lease renewal or the payment of eviction compensation for non-renewal) do not apply to the overriding lease.

A special (or short-term) lease may be concluded if all of the following conditions are met:

  • The lease shall be drawn up by written.
  • Owners and tenants must clearly express their desire to exclude commercial leases from status. This status is a set of rules that automatically applies to the commercial lease. It allows the tenant to benefit from various advantages: the right to lease renewal after 9 years, the payment of a eviction allowance in the case of non-renewal or rent review every 3 years or based on sliding scale clause.
  • The total duration of the successive lease or leases shall not exceed 3 years. There is no minimum time limit imposed.

If these conditions are not met, the rules of the status of commercial leases apply.

Example :

The derogating lease shall be adapted in the following cases:

  • Open a pop-up store as part of a commercial operation.
  • Test the launch of a new activity.

FYI  

An owner (lessor) may sign one or more short-term leases on the same premises and with the same tenant provided that the total duration does not exceed 3 years.

The landlord and the tenant are given a great deal of freedom to insert all the clauses corresponding to their needs (for example, the type of business or activities to be carried on in the premises or the amount of rent and charges).

Upon taking possession of the premises, an inventory must be attached to the lease of short duration.

It shall be established when the parties take possession of the premises in one of the following ways:

  • Be amicable
  • Either by a person mandated by the parties (e.g. a real estate agent)

Please note

When the parties disagree, they must ask a Commissioner of Justice (formerly bailiff) to establish the state of play. In this case, the costs are shared between the landlord (lessor) and the tenant.

The rent is set freely by the parties and is not capped.

The parties may provide for a rent escalation clause: the rent may then vary automatically, up or down, depending on Commercial Rent Index (CLI)) or the index of rents for tertiary activities (the tertiary activity rent index (ILAT)).

In principle, the derogating lease is concluded for a fixed period and automatically stops on the date stipulated in the contract.

Therefore, it is not necessary for the landlord to give the tenant leave.

At the end of the lease, the tenant must vacate the premises and return the keys on the last day of the contract. One exit inventory must be established either amicably or by a person mandated by the parties (e.g. a real estate agent). In case of disagreement on the content of the inventory, the owner or tenant can call on a commissioner of justice (formerly bailiff): in this case, the costs are shared between the parties.

Warning  

The tenant must pay his rent until the end of the derogatory lease, even if he decides to leave the premises before the end date stipulated in the contract.

If the landlord wishes to reclaim the premises, he must ask his tenant in writing to leave the premises. If it does not, the override lease automatically becomes a commercial lease.

Request to vacate premises

To recover the premises, the owner must end the occupation of the premises by notifying the tenant at the latest1 month after the end date set in the lease.

He shall send him one of the following documents:

  • Either a leave by act of commissioner of justice (formerly act of bailiff)
  • Either a registered letter with AR asking the tenant to leave the premises

Birth of a commercial lease

If the tenant stays on the premises after the expiry of the derogating lease, and the landlord has not come forward at the latest within one month, a new lease is automatically concluded. It is subject to the status of commercial leases.

In other words, when the tenant stays in the premises without opposition from the landlord, he benefits from a commercial lease.

Example :

A landlord announces to the tenant 2 days after the end of the derogatory lease that he does not wish to continue the contract. In this case, the tenant cannot claim the benefit of a commercial lease.

The short-term lease is signed for a firm period. This means that it is not possible to terminate the contract before the date set in the contract.

The tenant who wishes to leave the premises before the end of the short-term lease must in principle to pay the rent for the whole period provided for in the contract. However, he can try to negotiate amicably with the owner for an early departure.

At the time of signing the short-term lease, the lessor and the lessee may insert a termination clause which provides for the possibility of terminating the contract before the end of the period laid down. The clause must define the conditions of this termination (notice period, notification, etc.).

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