The Commercial Lease Act provides that a commercial tenant has the right to obtain the renewal of their commercial lease in preference to any other person (Article 13 of the Commercial Lease Act). Once the original nine-year term of the initial commercial lease has expired, the purpose is to allow the commercial tenant to continue operating their business and therefore to continue renting the premises.
A commercial tenant is entitled to request three lease renewals in total, in addition to the original nine-year term. This means that a commercial tenant could rent the premises for a maximum of 36 years.
Renewal of a commercial lease
This right of the commercial tenant is subject to several formal and substantive conditions set out in Article 14 of the Commercial Lease Act. One of these formal requirements is that the commercial tenant must submit their lease renewal request “no earlier than eighteen months and no later than fifteen months before the expiry of the current lease”.
The landlord must then respond within three months of receiving the lease renewal request. The landlord may:
- expressly agree to the request;
- fail to respond, or respond too late;
- refuse the request;
- accept the renewal request subject to different conditions.
In practice, tenants and landlords often conclude a lease renewal agreement within this statutory period. In that case, there is no issue. Such a lease renewal agreement is fully valid, as this possibility is expressly provided for in the Commercial Lease Act.
However, it sometimes happens that the tenant and landlord have already reached a lease renewal agreement before the eighteen-month period preceding the expiry of the commercial lease begins.
Is such an “early” agreement valid?
At first sight, this may not seem problematic. However, appearances can be deceptive. According to settled case law of the Court of Cassation, such an “early” lease renewal agreement is relatively null and void (see Cass. 19 June 1992, Arr. Cass. 1991-92, No. 551, RW 1994-95, 1302; Cass. 21 March 2003, Arr. Cass. 2003, No. 187, RW 2005-06, 820; Cass. 28 January 2005, Arr. Cass. 2005, 242).
According to the Court of Cassation, a lease renewal agreement concluded before the start of the “statutory period” does not release the commercial tenant from the obligation to submit a renewal request during that statutory period, even if the parties have already concluded a renewal agreement.
Article 14 of the Commercial Lease Act is mandatory in favour of the landlord. This means that only the landlord may invoke the invalidity of an “early” commercial lease renewal agreement. The landlord is not required to comply with a lease renewal agreement concluded prematurely. The landlord has the right to consider all options relating to the property within the period provided by law.