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Commercial Leases

Commercial Leases

Commercial leases are not subject to the same formalism as residential leases.

Whether you are the tenant or the landlord the lease should be clear and cover all aspects of your relationship. Often, the simplest such formalities are not observed when the lease is signed. The right to maintain the lease upon sale of the building where the leased premises are located, is then at risk.

There are several expressions specific to the field of commercial leases.

  • Lease goal (Gross): The rental price includes all operating expenses for the building.
  • Lease net: the tenant pays the base rent and property taxes.
  • Lease net-net:The tenant pays the property taxes and insurance in addition to the base rent. The landlord is normally responsible for operating expenses such as heating, cooling and maintenance of common areas such as parking, interior corridors, etc. The landlord in turn is responsible for expenses related to the structure of the building such as the roof, bearing walls and foundation.
  • Net-net-net (Triple net) The tenant then pays all expenses and operating expenses such as property taxes, insurance and common area maintenance (the three nets) in addition to base rent. Often transferred charges are increased by an amount of 5% for administrative purposes by the landlord. In addition to operating expenses, the tenant is responsible for all capital expenditures in proportion.

The new owner of the building may terminate a commercial lease that is not published. Indeed, a commercial lease for an indefinite period may be terminated upon notice of the new owner. If the lease is for a fixed term and there is more than 12 months to go from the alienation of the property, it may be terminated at the expiry of the 12 months by giving the tenant written notice of 6 months. If less than 12 months remain of the lease, the tenant is protected for the remaining term.

Once published, the commercial lease is better protected than one that is not, as it ensures compliance with the lease and maintain in the leased premises. If the lease is published at the Land Registry before the deed of alienation, the new owner cannot terminate the lease.

Unless the building is already sold, it is never too late to publish a commercial lease in order to protect your rights, to the extent that all the above formalities have been complied with when signing the lease.

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