Commercial Lease Agreement

A commercial lease agreement is used when the landlord rents a building or a part of it to the tenant for purposes other than residential use. The lease can also cover units or similar spaces. The reasonableness of commercial lease agreements is evaluated differently than in residential lease relationships, where the tenant is typically a consumer.

A commercial lease agreement can be for a fixed term, or it can be indefinite. The determination of the contract duration is within the parties’ freedom of contract. A lease agreement for commercial premises can also be made orally, in which case the agreement is valid indefinitely. However, for the sake of evidentiary matters, it is advisable to have the agreement in writing.

The landlord and tenant can agree on a reasonable security deposit to ensure compliance with the contractual obligations. Unlike residential premises, there is no legal limit on the amount of the security deposit for commercial lease agreements; the law only refers to a reasonable security deposit. In practice, the reasonableness of the security deposit usually corresponds to 2–4 months’ rent.

The parties are free to agree on the notice period in the contract. The notice period can be the same for both parties. If the parties have not agreed on notice periods, the notice period is 3 months for the landlord and 1 month for the tenant.

Termination of a Commercial Lease Agreement An indefinite-term commercial lease agreement ends after the notice period specified in the contract if either party terminates the agreement. The parties can also mutually agree on the termination of the lease agreement within the ongoing notice period or set a new termination date.

A tenant does not need a specific reason to terminate an indefinite-term lease agreement. The landlord, on the other hand, must always state the grounds for termination. Both the tenant and the landlord must provide the termination notice in writing and with evidence. It is crucial to be able to prove the delivery and receipt of the notice.

A fixed-term contract binds both parties for the agreed-upon period (e.g., 60 months), and it cannot be unilaterally terminated with notice.

Under certain conditions, the landlord and tenant can terminate the lease agreement, ending it immediately. The landlord can terminate the agreement if:

  • The tenant fails to pay the rent.
  • The lease right is transferred, or the unit or a part of it is handed over to another party contrary to the provisions.
  • The unit is used for a purpose or in a manner other than what was required in the lease agreement.
  • The tenant conducts or allows disruptive activities in the unit.
  • The tenant poorly maintains the unit.
  • The tenant violates health and order regulations.
  • The tenant otherwise significantly breaches the lease agreement regarding the unit.

The tenant can terminate the lease agreement if:

  • The landlord significantly breaches what was agreed upon concerning the unit.
  • The unit or a part of it is taken out of the tenant’s control.
  • Using the unit as stipulated in the agreement poses an obvious danger to health.

If a party suffers damage due to the termination of the lease relationship, they have the right to claim compensation for the incurred damage.

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