Everything you need to know about the termination of a commercial lease

Everything you need to know about the termination of a commercial lease


The commercial lease is a contract concluded between a lessor and a tenant, over a minimum period of 9 years. Can it be terminated before its term? If yes, how ? In which cases can the commercial lease be terminated? Find out everything you need to know.
When to terminate a commercial lease?
A commercial lease runs for a minimum period of 9 years. However, it is possible to terminate it before the end of this period. Indeed, the commercial lease can be terminated by either of the two parties (tenant or lessor in certain cases only), at the end of each three-year period, ie every three years from the signing of the lease.
Good to know
If the lease is tacitly renewed beyond 9 years, the rental contract can be terminated at the end of each calendar quarter.
Read also: Commercial lease: rents and charges
What notice for the termination of the commercial lease?
To terminate a commercial lease, a notice period of a certain duration must be respected. And this, whether the termination is initiated by the tenant or the owner. The notice must be announced 6 months before the end of the lease or the end of the three-year period.
How do I terminate a commercial lease when it expires?
To terminate the commercial lease at the end of the 9 years or each three-year period, it is necessary to respect a notice, but also to follow a precise procedure.
Termination initiated by the tenant
The tenant must notify his lessor of his departure by registered mail with acknowledgment of receipt, or by bailiff. He does not have to justify his dismissal if it takes place at the end of the three-year period or the 9 years of the commercial lease.
Termination initiated by the lessor
The lessor not wishing to renew the commercial lease of his tenant at the end of the lease or the three-year period, must deliver to the latter a bailiff's deed informing him of his decision, specifying the reasons for refusal. It must also indicate that the tenant who intends either to contest the dismissal or to request the payment of an eviction indemnity must seize the court before the expiry of a period of two years from the date for which the leave was given. The tenant can contest this leave and/or ask for an eviction indemnity. The lessor then has three months to make its final decision known.
In which cases can a commercial lease be terminated?
The commercial lease can be terminated by the tenant or by the lessor, in various cases.
Retirement of tenant
A tradesman who has totaled his pension rights may request the termination of the commercial lease at any time. He therefore does not have to wait for the expiration of the three-year period or the expiry of the lease. However, he must respect the 6-month notice period.
Tenant disability
As for retirement, the tenant benefiting from a disability pension may request the termination of the commercial lease at any time, respecting the notice of 6 months.
Gross negligence of the tenant
As in a classic rental, the tenant must respect certain obligations included in the commercial lease. If he does not respect one of these obligations, the lessor can consider him at fault and request the early termination of the lease, by the courts. The judge decides, after studying the request, whether or not to terminate the commercial lease.
Leave for work

 

 Some work may require the evacuation of the premises. The lessor can therefore terminate the lease at the end of the three-year period or at the end of the 9-year period in order to carry out this work. Please note that not all work gives the lessor this right. The works allowing the termination of the commercial lease by the lessor are:
construction or reconstruction of the building;
property restoration or an urban renewal project;
the transformation of the property to give it a main residential use.
Another obligation for the lessor wishing to carry out work: to offer equivalent replacement premises to his tenant or to pay him an eviction indemnity. The tenant then has 3 months to accept or refuse the lessor's offer.
Good to know
If the tenant chooses the replacement premises, the moving costs are reimbursed by the lessor.
Read also: Business relocation: the steps
Reorganization or judicial liquidation of the tenant company
In these two cases, the termination of the lease is not automatic. The lease contract continues normally, unless the judicial administrator or the liquidator decides to terminate it or assign it. The lease can therefore be terminated at any time after the opening of the procedure.
The lessor may also request the termination of the lease in the event of non-payment of rents or charges. For this, he must seize the judicial court within three months after the opening of the collective procedure.
If the lease contract is assigned to another tenant, the latter must execute the commercial lease under the conditions applicable on the day of the opening judgment.
Death of tenant
The commercial lease is not automatically terminated upon the death of the tenant, unless this has been previously indicated in the lease contract. From then on, the lease contract is transmitted to the heirs of the deceased. The latter must comply with the termination conditions applying to tenants retiring or in a situation of disability – that is to say that they can request the termination of the lease at any time by respecting a notice period of 6 months. .
Terminating the commercial lease amicably: is it possible?
Both parties may decide to terminate the commercial lease at any time amicably, without waiting for its term or the three-year termination period. For this, the two parties must agree conventionally and ensure that no legal provision prevents the termination of the commercial lease amicably. It is advisable to formalize the amicable termination of the lease in writing to define the terms, indicating in particular the effective date of the termination and any compensation provided for the tenant, if the termination is due to the lessor. The written document must be clear and unequivocal to avoid any possible legal dispute.
Read also: How to protect your business from a legal point of view?
Termination clause of the commercial lease: what is it?
One or more termination clauses can be added to the commercial lease in order to facilitate certain procedures and avoid the intervention of justice. These set the contractual obligations of the tenant and sanction him by early termination of the commercial lease in the event of breach of these obligations.
The termination clause allowing the commercial lease to be terminated concerns very specific points, such as:
delays and non-payment of rent and/or charges for the leased property;
use that does not comply with the use provided for in the commercial lease;
work or modifications carried out without the consent of the lessor;
deterioration of commercial premises;
the subletting of all or part of the commercial premises.
If a lessor wishes to implement the termination clause and terminate the commercial lease before its term, he must be able to provide proof of the tenant's fault.
Good to know
The termination clause also sets out the obligations of the lessee of the leased property. In the event of default on the part of the tenant, the lessor may terminate the commercial lease as of right.
Termination of the commercial lease: what is the eviction indemnity?
An eviction indemnity may be paid to the tenant by the lessor after termination of the lease or refusal of renewal. The eviction indemnity is assessed according to the damage suffered by the tenant (loss of customers or not).
If the tenant loses his clientele, he is compensated on the basis of the value of the goodwill. This indemnity makes it possible to compensate for the loss of funds and to acquire a new fund of the same value. If the tenant retains his clientele, the indemnity paid is lower. It is called travel or transfer compensation, and corresponds to the value of the right to the lease.