Finding out about commercial leases

What is a commercial lease?

A commercial lease is a contract that allows you to rent premises to carry out a commercial activity or cottage industry. This contract is essential, as it lays down the rules between the landlord and the tenant, while protecting both parties.
In general, the lease term is at least nine years. However, there is an exception to this principle for temporary businesses, such as pop-up stores or short-term restaurants. The parties can enter into a short-term lease, i.e. limited to one year, to enable the tenant to test out a business before making a long-term commitment.
A commercial lease must meet three conditions:

• It must concern premises intended for a business or craft;
• The business must have a direct link with customers (not just wholesalers);
• The activity must take place in the rented premises.

What are the legal texts governing commercial leases?

Since 6 January 2014, the management of rules specific to commercial leases has fallen under regional jurisdiction (Civil Code). In Wallonia, a decree adopted on 15 March 2018 introduced special provisions for short-term leases.

• Go to the commercial leases section of the Civil Code
• Browse the decree of 15 March 2018 on short-term commercial leases and amending the Civil Code.

How long is a commercial lease?

A commercial lease has a minimum term of nine years. This rule applies to both tenants and subtenants.

In the Walloon Region, however, since 2018, it has been possible to opt for a short-term lease of up to one year. This type of lease is designed to enable retailers to test out their business, concept or product without committing to a nine-year period. The lease begins when the tenant first enters the premises, not when the contract is signed.

How does rent and rent review work in a commercial lease?

The amount of the rent is freely agreed between the landlord and the tenant. Every three years, either party may request a rent review. This request must be made three months before the end of each three-year period.

To request a review, you must prove to the Justice of the Peace that the normal market rental value of the property is either lower or at least 15% higher than the current rent stipulated in the lease or set at the time of the last review. Once the review has been accepted, the new rent will be applied from the first month of the new three-year period.

If the landlord forgets to index the rent, they can claim indexation arrears for up to 12 months.
 

How does the renewal of a commercial lease work?

Tenants have the right to request renewal of their commercial lease up to three times, enabling them to continue their business activity on the same premises. To exercise this right, the tenant must send their request to the landlord by registered letter with acknowledgement of receipt, or through a bailiff. This request must be made between 15 and 18 months before the end of the current lease.
However, the landlord may refuse to renew the lease for several reasons:

1. Personal occupation: The landlord wishes to occupy the premises themselves, or have it occupied by a close family member or by a company in which they have a major interest.
2. Change of use: The landlord wants to use the building for something other than a commercial activity.
3. Reconstruction: The landlord intends to rebuild the building, or the part of it where the tenant carries out their business. Reconstruction is a transformation preceded by demolition, both of which affect the structure of the premises, and the cost of which exceeds three years' rent.
4. Serious breaches: The tenant has failed to comply with the obligations stipulated in the lease, such as maintenance of the premises or unauthorised changes to the business activity. If the landlord is also the owner of the business capital, and the lease covers both the property and the business capital, breaches relating to the operation of the business are also taken into account.
5. Higher rent offer: A third party offers to pay higher rent, and the current tenant does not wish to match this offer.
6. Absence of legitimate interest: The tenant has started a similar activity nearby or has other premises in the immediate vicinity where they could continue their business.

Can I sublet or transfer my commercial lease?

If a tenant wishes to sublet their space or transfer their commercial lease, they must inform the landlord by sending them a proposed deed of assignment or sublease by registered letter or through a bailiff. For short-term commercial leases, a notice period of one month is sufficient.

It is possible for the landlord and the tenant to include a clause in the lease prohibiting transfer and subletting. However, this clause does not apply where the transfer or sublease is linked to the transfer or lease of the business, except in two specific situations:

1. Landlord's residence: If the landlord or a member of their family lives in part of the building.
2. Landlord's justified objection: The landlord may object to the transfer or sublease within 30 days of notification of the proposal by the tenant. This objection must be justified, particularly if the tenant has occupied the premises for less than two years, or if the lease has been renewed for less than two years.

If the landlord does not reply within 30 days of notification of the proposed transfer or sublease, they are deemed to have given their consent.

How can I terminate my commercial lease early?

Even if a commercial lease has a minimum term of nine years, it can be terminated early. This can be done either by mutual agreement between the parties, or unilaterally under certain conditions.

By mutual agreement 

If the landlord and tenant decide together to terminate the lease, this decision must be formalised by an authentic deed, such as a notarial deed, or by a declaration before a judge.

Unilaterally

• By the tenant: The tenant may terminate the lease at the end of each three-year period, provided they give six months' notice. This notice must be sent by registered letter or through a bailiff.
• By the landlord: The lease may include a clause allowing the landlord to terminate the lease at the end of each three-year period, subject to one year's notice. This notice must also be sent by registered letter or through a bailiff. The landlord must justify this termination by their intention to reclaim the premises in order to carry out a business activity themselves, or to enable a close family member or a related company to do so.

Eviction compensation 

If the tenant has regularly expressed their desire to renew the lease and the landlord refuses, the tenant may, in certain cases, be entitled to an indemnity known as "eviction compensation".