Commercial leases

Types of lease

What types of arrangement does the law recognize which allow occupation and use of real property for a limited period of time?

Angola

Angola

The law differentiates between urban leases, which are governed by both the Angolan Civil Code and Law no. 26/15, of 23 October 2015 (Lease Law) and rural leases, governed by specific provisions of the Civil Code.

Urban leases may be for residential and non-residential purposes, included in the latter are the lease of industrial real estate, commercial facilities, offices, retail or any other legally admitted use (commercial leases).

Contracts for the use of shopping centre units have been used as an alternative to commercial leases. They cover the use of a grouping of stores, the provision of services and common parts. However, the legal framework for such use has not yet been approved. So, such contracts are becoming more popular and are nevertheless construed according to the Lease Law.

Australia

Australia

There are two main types of arrangements allowing a person, company or other organization to occupy real estate for a limited period of time without buying it outright.

The first is a lease, which grants the right of exclusive possession of the property for an agreed period of time. A lease confers on the tenant contractual rights and a proprietary interest in the property, which can be transferred to a third party subject to specific restrictions set out in the lease.

The second is a licence which grants permission to occupy the property. Unlike a lease, the occupier of a property under a licence does not have exclusive possession of the property and generally cannot transfer the licence to a third party. Generally, licences are not registered on a public register with the relevant government authorities.

Belgium

Belgium

Under Belgian law, a distinction can be made between arrangements governed by the Belgian civil law on leases (including the rules, as the case may be, enacted by the three regions following the Sixth State Reform) and contracts with a similar purpose that are governed by Belgian contract law.

There are different types of lease agreement:

  1. Lease agreements subject to the general provisions of the Belgian Civil Code
  2. Lease agreements relating to the tenants’ principal place of residence; the Brussels Capital Region enacted an ordinance dated 27 July 2017 related to the "housing lease" (bail d’habitation) which fully replaces the Residential Lease Act on its territory. This ordinance (the Housing Lease Ordinance) came into effect on 1 January 2018; in the Walloon and Flemish Regions, draft decrees are currently discussed in order to implement similar legislation related to "housing lease" (bail d’habitation) in these Regions
  3. Commercial lease agreements, protecting retailers or artisan activities; in the Flemish Region, short-term (pop-up) commercial lease agreements can also be concluded and are governed by the provisions of the Flemish Decree of 17 June 2016 on the short-term lease of premises for commercial and artisanal purposes, which entered into force on 1 September 2016; in the Walloon and Brussels Regions, draft decrees are currently discussed in order to implement short term (pop-up) commercial lease agreements in these Regions
  4. Lease agreements relating to real estate leased to farmers

However, other types of contract exist that are similar to lease agreements, but which are not governed by specific provisions in the Civil Code, such as the operational/financial leasing (and financing) of commercial real estate (offices and industrial buildings – location-financement/onroerende leasing), facility provision agreements (mise à disposition/terbeschikkingstelling) for warehouses, parking spaces etc and hotel management contracts. Finally, lease contracts for office spaces and retail stores in shopping malls are sometimes combined with service agreements relating to reception facilities, telecommunication services, meeting rooms etc and may or may not be contained in a single written contract.

The Commercial Leases Act provides for certain mandatory provisions which the parties cannot contract out of, generally for the protection of the tenant, as well as certain optional provisions which parties can adopt if they wish. The same applies to the Residential Lease Act, and to some provisions of the Housing Lease Ordinance.

Only general leases (offices, warehouses, industrial buildings) and commercial leases are discussed here. Residential or housing leases are not covered.

Bosnia-Herzegovina

Bosnia-Herzegovina

In general, there is only one type of lease agreement, the business lease. This is regulated by the Law on Obligations. In particular, leases of business premises and business buildings are governed by the Leases of Business Buildings and Premises Act which is in force in both the Republika Srpska and the Federation of Bosnia and Herzegovina.

In the Federation of Bosnia and Herzegovina some cantons have adopted a separate Leases of Business Buildings and Premises Act which imposes further regulations on such leases.

For business leases there are additional rules established by municipal bodies. These provide for additional obligations on the contracting parties to be inserted into lease agreements.

Canada

Canada

There are two main types of arrangements allowing a person, company or other organization to occupy real estate for a limited period of time without buying it outright.

The first is a lease, which grants the right of exclusive possession of the property for an agreed period of time. A lease confers on the tenant contractual rights and a proprietary interest in the real estate, which can be transferred to a third party subject to specific restrictions set out in the lease. Most commercial leases broadly fall into one of two categories: ‘gross leases’ where the tenant’s financial responsibility is primarily limited to the payment of rent and the landlord is fixed with the operating costs of the property; and ‘net leases’ where the tenant is also responsible for some or all of the cost of operating, insuring and paying taxes on the real property. Leases may be for a building or portion of a building, for land alone (commonly referred to as a ‘ground lease’) or a combination of land and building.

The second is a license which grants permission to occupy or use the property in common with the owner or others authorized by the owner. Unlike a lease, a license is merely a personal contractual arrangement between the original parties and confers no transferrable interest in the real estate to the licensee, and is not binding upon future owners of the land.

In granting a license, property owners need to ensure that they are not inadvertently granting a lease. The courts will not consider whether the document is called a lease or a license but will instead look at the substance of the agreement to determine whether it constitutes a lease or a license.

China

China

PRC law recognises only one type of lease in the Contract Law of the People's Republic of China. Residential leases are also subject to local leasing policies set out by the PRC Government and the housing authorities through the City People's Government in different cities.

Croatia

Croatia

The Obligations Act regulates lease and rental agreements, the Leasing and Sale of Business Premises Act provides specific regulations on the lease of business premises and the Apartment Rent Act governs apartment rentals.

Czech Republic

Czech Republic

Czech law recognises only one type of lease based on the regulations which govern leases in the Czech Civil Code. Such leases may be entered into for limited or for unlimited periods of time. Leases of residential real estate are governed by the general and special provisions on lease agreements in the Code. The Czech Civil Code also includes special provisions for leases of premises used for business purposes.

Czech law also recognises a separate right in rem to use property for a certain period of time, as well as the leasehold right, which provides the beneficiary not only with the right to use but also a right of receive profits from the property.

Denmark

Denmark

There are different types of lease in Denmark: residential tenancies, commercial tenancies, leasing and forpagtning.

The general rule is that a tenancy is not limited in time. If either of the parties wish to end the contract there are requirements as to notice and there are certain rules on grounds for termination provided for by law.

Residential tenancies are regulated by the Rent Act, dated 9 March 2016. The Rent Act provides tenants with a high level of protection in the contractual relationship with the landlord, notwithstanding the contents of the contract itself. If a form is used as a basis for the residential tenancy contract, it is mandatory to use a special form (Form A9), authorised by the Ministry of Housing. Commercial tenancies are regulated by the Commercial Rent Act, dated 16 December 2010. There is no specified form of contract. Thus, the landlord and tenant have a large degree of freedom of contract, subject to some significant exceptions, eg regarding termination.

Leasing and forpagtning are generally used in commercial relations and deal with various types of use of real estate and/or the operation of a business from the premises. Leasing and forpagtning will not be elaborated on further as they are types of contract that are not regulated by the Commercial Rent Act and often cover other financial or business matters.

Leases of space within a larger unit, such as concessions within a department store, and leases of land plots are not governed by the Commercial Rent Act or any other statute. The parties are free to contract as they wish.

France

France

Commercial leases

Commercial leases are normally granted for the minimum term of nine years, and are subject to the mandatory legal regime laid down in the Commercial Code. The tenant must be registered with the Commercial Court registrar. A tenant has the right to terminate the lease at the end of each three-year period and also a right to renew the lease.

Overriding leases

Overriding leases (or short-term leases) have a duration of up to three years. The tenant gives up the protection of the mandatory regime applicable to commercial leases. Any renewal of the lease must be on the terms of a normal commercial lease. The tenant must be registered with the Commercial Court registrar.

Professional leases

Professional leases have a minimum duration of six years and are exclusively for professional activities (to the exclusion of commercial, craft, industrial and agricultural activities). The lease can be terminated by the tenant at any time by giving six months' notice.

Germany

Germany

German law differentiates between leases of commercial and/or residential premises (Mietvertrag) and leasehold agreements (Pachtvertrag). Leases of commercial or residential premises are more common than leasehold agreements. While a lease of commercial and/or residential premises entitles the tenant to use the leased property, the beneficiary of a leasehold agreement is entitled both to use the leased property and to benefit from it, for example, in the case of a lease of a farm that includes all farm machinery and the right to harvest crops etc. 

German law also recognises hereditary building rights (Erbbaurechten) entitling the holder to use the property for up to 99 years and to erect buildings on the land. However, hereditary building rights are closer in nature to freehold ownership than to leasehold.

Hong Kong

Hong Kong

There are two main types of arrangement allowing a person, company or other organization to occupy real estate for a limited period of time without buying it outright.

The first is a lease, which grants the right of exclusive possession of the property for an agreed period of time. A lease confers on the lessee contractual rights and a proprietary interest in the property, which can be transferred to a third party subject to specific restrictions set out in the lease.

The second is a licence which grants permission to occupy the property. Unlike a lease, the occupier of a property under a licence does not have a proprietary interest or the right to exclusive possession. A licence is not generally transferable to a third party nor is it binding on a successor in title of the person giving the licence, that is, the licensor. In addition, under a licence the period of occupation does not have to be fixed and it creates no interest in land.

In granting a licence, property owners need to ensure that they are not inadvertently granting a lease. The courts will not consider whether the document is called a lease or a licence but will instead look at the substance of the agreement to determine whether it constitutes a lease or a licence.
 

Hungary

Hungary

Hungarian law differentiates between regular property leases that are used for leasing commercial and residential buildings or units and usufructuary leases that are used for leasing agricultural land. Regular leases are used for commercial, retail, industrial or residential premises and are much more common than usufructuary leases. While a lease entitles a tenant to use the relevant property, under a usufructuary lease agreement a tenant is entitled to use and collect income from the property.

A usufructuary lease agreement is common in relation to arable land, woodland and grazing land and the legal provisions applicable to regular leases also apply to usufructuary leases, with a few exceptions.

Commercial property leases follow the general rules applicable to regular property leases and more often than not are signed on a triple-net basis in line with international standards. When the property is financed rents are usually pledged in favour of the financing bank.

In the case of office leases, the fit-out works and delivery of premises, repair and maintenance, the allocation of service costs and the grounds for termination are, as a rule, regulated in great detail.

Hotel leases are similar to office leases and often contain detailed provisions relating to the management of the property. In the case of international franchises management is dealt with in a separate management agreement involving a dedicated hotel-management company.

Retail leases may have provisions enabling the landlord to maintain a healthy mix of tenants in the shopping centre. These agreements may contain obligations which exist for the benefit of the shopping centre as a whole, such as keep-open obligations and obligations to contribute towards the marketing of the shopping centre. Although the landlord will maintain the structure and exterior of the premises, a retail tenant may be given the right to maintain its own shopfront in its normal trading style.

Industrial property leases may contain specific provisions with respect to the activities carried out at the leased premises/property.

Ireland

Ireland

Commercial leases in Ireland generally fall into one of two categories: short-term letting agreements which usually have a term of less than five years, or full repairing and insuring leases which are usually granted to commercial tenants for terms of up to 20 years though terms of between 10 and 15 years are becoming more common.

A person/company or organisation can also occupy premises under the terms of a licence agreement. Unlike a lease, a licence does not transfer any estate or interest in the premises to the licensee. It merely grants them permission to occupy the premises for a specific duration. A licence is personal to the licensee and cannot be transferred to a third party. 

Italy

Italy

Italian law differentiates between property leases (locazione) and business branch leases (affitto di azienda). Property leases are used for residential or commercial premises and they are governed by the general provisions of the Italian Civil Code.

In relation to non-residential leases, certain distinctions apply to hotels and other premises used for activities involving contact with the public. Mandatory provisions apply regulating the landlord/tenant relationship in favour of the tenant. These include provisions relating to the term of the lease, rent increases, the tenant's right to carry out activities involving contact with the public etc. Any deviation from these in the lease contract which is less favourable to the tenant is considered invalid, even if explicitly accepted by the tenant. An invalid clause, however, does not render the entire contract invalid.

Non-residential lease agreements (ie for offices, retail space and hotels) providing for a yearly rent greater than €250,000, provided that such leases do not affect buildings with a historical value confirmed by a local administrative order, may not be subject to the mandatory provisions of the Tenancy Law. In other words, for such leases, the parties are free to agree terms which differ from the mandatory provisions of the Tenancy Law, which are generally to the benefit of the tenant. This new option applies to any lease agreements entered into after 11 November 2014. Certain rules applicable to lease agreements and established by the Italian Civil Code, however, will still apply (eg the rules relating to the allocation of responsibility for maintenance between the landlord and the tenant).

If the leased assets are a 'going concern' or 'business branch' (azienda or ramo d'azienda), as defined under Italian law, the above-mentioned rules of the Civil Code do not apply and the parties are free to contract as they wish.

Italian law also recognises a contract for granting free use of premises (comodato). Under this type of contract, the use of an asset can be granted free of charge for a specific purpose over a set period of time. Contracts like this are often used when a tenant needs to carry out fit-out and decorating work on the premises before the start of the lease.

The relevant energy performance certificate (APE) must be attached to any new lease agreement (whether affecting a property or a branch of a business) or sub-lease (but not to a renewal). Where the certificate is missing, the lease agreement may be declared entirely null and void.

Japan

Japan

Under Japanese property law, there are two basic forms of commercial leases: (i) an ordinary lease, and (ii) a fixed-term lease.

Ordinary leases and fixed-term leases are distinguished by the parties' intentions regarding termination at the end of the lease term.  In a fixed-term lease the parties terminate the lease at the end of the lease term, however in the case of an ordinary lease the lessee may continue the lease even after the end of the lease term.  Under an ordinary lease, the lessee is provided more protection as the lessor may not demand that the lessee vacate the premises at the conclusion of the lease term unless specific ‘due reasons’ exist.  Such due reasons are interpreted strictly by the court, and are discussed in further detail in the section regarding ‘Security of tenure’ below. 

Netherlands

Netherlands

Dutch law differentiates between regular leases (huur) and ground leases (pacht). Dutch law has different regimes for business space, retail space and private housing.

Regular leases are much more common than ground leases. While a regular lease entitles the lessee to (solely) use the relevant property, the ground lessee is entitled to use and benefit from the property. A ground lease would be, for example, a lease of a farm including all machinery or the right to harvest crops. Generally, most legal provisions regarding regular leases also apply to ground leases.

Dutch law also recognizes publicly registered rights of use (vruchtgebruik, erfpacht) and building rights (opstal), which entitle the holder to use the land for the purpose of erecting buildings on the land. However, the nature of these rights is closer to freehold property than to leases.

Nigeria

Nigeria

Under the Land Use Act which covers the whole of Nigeria, the law does not differentiate between a Commercial, Residential or Mixed Development Lease. The nature of interests in real property after 1978 is leasehold for terms not exceeding 99 years.

In practice, the land is vested in the government and the Governor grants the interests to individuals and corporate entities to hold and use subject to the conditions of the grant.

Norway

Norway

In Norway, there are four main types of lease: ground leases governed by the Act Relating to Leasehold Sites, agriculture property leaseholds governed by the Act on Leasehold Agriculture Properties, domestic leases governed by the Tenancy Act and business leases which are also governed by the Tenancy Act ('commercial leases').

Poland

Poland

The Polish Civil Code distinguishes between: a lease (najem) which grants the right to use property for a definite or indefinite period of time subject to payment; and a tenancy (dzierżawa), which governs the right to use and collect profits from real estate for a definite or indefinite period of time subject to payment.

Portugal

Portugal

The New Regime on Urban Lease Scheme (Civil Code and Law no. 6/2006, of 27.02., amended by the Law 31/2012, of 14 August, Law No. 79/2014, of 19 December and Law No. 43/2017, of 14 June) applies to urban buildings. The Rural Lease Regime (Decree-Law 294/2009, of 13 October) applies to farmsteads.

The applicable statutory scheme to urban buildings differentiates leasing for residential and non-residential purposes. A lease for residential purposes may be for a fixed period of time (Definite Term Contracts) or for an unspecified period of time (Indefinite Term Contracts).

Leasing for non-residential purposes may include the leasing of industrial real estate, commercial facilities, offices or for any other legally admitted use.

The law also recognizes:

  • Rural leasing in which the tenant has the right to use the buildings that already exist provided they are used for any purposes associated with farming activity
  • Forestry leasing

Although the Contracts for the Use of Stores in Shopping Centres regime has not yet been approved, the regime has proved to be an alternative to non-residential contracts when applied to a commercial space integrated in a set of stores and for commercial spaces administered by a managing entity.

Romania

Romania

In Romania, there are four main types of arrangement allowing a person, company or organization to occupy real estate for a limited period of time without buying it outright:

  1. A lease agreement
  2. A lease of a dwelling
  3. A lease of agricultural land
  4. A loan agreement for the use of the property (comodatum)
Russia

Russia

The main types of contractual arrangement that allow a person/company or other organization to occupy real estate for a limited period of time without buying it outright:

  • Leases (including leases of plots of land)
  • Free limited use (for plots of land)
  • The rental of residential property
  • Easements

A lease grants the right of possession and use of the property for an agreed period of time in exchange for compensation. The tenant is entitled to use the property within the limits set down by law and the lease agreement.

With free limited use, the occupier has permission to use the property without compensation. Such arrangements are used very rarely in practice, mainly in relation to land which is owned by the state.

Similar to leases, the rental of residential property allows an individual tenant to use the property for an agreed period in exchange for compensation. This arrangement, however, is governed by a different set of rules to commercial leases.

A limited right to use real property may be established by an easement agreement. An easement is usually created to ensure access to property through a third party's adjacent real estate.

Slovak Republic

Slovak Republic

The types of lease used in Slovakia are:

  • General leases under the Civil Code which applies unless specific legislation overrides it
  • Specific types of lease governed by the Civil Code: in the case of an apartment lease for a term of less than six years the Act on Short-term Apartment Leasing, the Act on Leasing and Subleasing of Commercial Premises and the Leases of Agricultural Land and Forests Act
Spain

Spain

Spanish law differentiates between urban leases (arrendamientos urbanos) and ground leases (arrendamientos rústicos).

The Urban Leases Act differentiates between commercial and residential leases, with a more protective legal regime applying to tenants holding urban residential leases. Commercial leases are governed firstly by the agreement of the landlord and the tenant and, in the absence of agreement, by the Title III of the Urban Leases Act (Sections 29-35). As an additional right, the Civil Code will be applied.

The Ground Leases Act (Ley de Arrendamientos Rústicos) applies to ground leases, such as the lease of a farm including all machinery and the right to cultivate crops, etc. The ground leases are governed by what is expressly agreed by the parties, as long as they do not oppose the Ground Leases Act, in default of express regulation by the Civil Code, and, failing that, applicable custom and practice.

For hotels, a regular lease is relatively rare. The parties will either agree upon a management contract or will let the hotel building, together with its inventory, on the basis of a fixed rent plus a rent based on the income of the hotel.

Sweden

Sweden

The Leases of Real Property Act (hyreslagen) of 1970, which is incorporated as chapter 12 of the Real Property Code (jordabalken), regulates both commercial and non-commercial leases. However, there are some differences between the rules governing these two different categories of lease. Where statutory provisions are in force, restrictions limit the parties' ability to contract out of them.

The same provisions apply to offices, warehousing, industrial and retail premises.

Different rules apply to leases of land rather than of buildings or parts of buildings. Leases of land are divided into three categories:

  1. Agricultural Leases of Land (Jordbruksarrende)
  2. Residential Leases of Land (Bostadsarrende)
  3. Commercial Leases of Land (Anläggningsarrende)
Thailand

Thailand

The Civil and Commercial Code recognizes all kinds of leases. It is more of an issue of whether the lease is enforceable, rather than the form of the lease. In general, a lease of immovable property is not enforceable by a cause of action unless some written evidence signed by the party liable exists. If the lease is for a term of more than three years, it is enforceable only for three years unless it is made in writing and registered at the relevant governmental authority.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Types of interest

In Abu Dhabi, a lease is a personal contract of hire, more akin to a licence and not an interest in land. Most non-owner occupiers in both the residential and commercial sectors are lessees under leases. Non-UAE nationals (and companies owned in whole or part by non-UAE nationals) may only be granted long leases (being leases for a term of 25 years or more) within one of the designated investment areas. Alternative rights of occupancy that do create rights in property are:

  • Usufruct: A right in rem in favour of the usufructuary to use property of another and to exploit it provided that it remains in its original condition’. This right can however, only be held by non-UAE Nationals in one of the designated investment areas of Abu Dhabi (and is restricted to a maximum term of 99 years).
  • Musataha: A right in rem conferring upon the owner thereof the right to build a building or to plant on the land of another’. Again, this can only be held by a non-UAE National in investment areas (restricted to a 50-year renewable term).

These rights are investment interests allowing exploitation or development as well as occupancy. Non UAE nationals may only hold these interests within one of the designated investment areas for the limited periods of time which apply.

Abu Dhabi law does not provide a clear distinction between a lease (a personal right) and a usufruct (a right in rem). The law does state that long leases (being those with a term of 25 years or more) are property rights, however, it does not clearly define the characteristics of leases with terms shorter than this. In practice, Abu Dhabi Municipality (ADM) have deemed leases for a term of more than four years granted in favour of a non-UAE national (or a company owned in whole or part by a non-UAE national) in relation to land outside an investment zone and which contain rights to sublet to be usufructuary rights (and therefore not capable of being granted to a non-UAE national outside an investment zone).

Within the Abu Dhabi Global Market free zone (which geographically covers the whole of Al Maryah Island), the following occupational interests are also recognized:

  • Leasehold (which could include one or more sublease interests and excludes occupational (or otherwise) licence arrangements) – this gives the tenant the right to use and occupy the property for a specified period of time, and
  • Strata interests as a means of dividing real property into lots or sub-lots for strata ownership

Registration

(a) In relation to leasehold interests located within Abu Dhabi but outside the Abu Dhabi Global Market free zone:

There is an obligation to register all leases within Abu Dhabi. Failure to register a lease will result in the lease being considered to be not enforceable save for the personal obligations between the parties.

Leases of four years or less

All Abu Dhabi buildings and units within them being leased on terms of four years or less are required to be registered under a system known as Tawtheeq. The lessor is responsible for the registration process and for the fees. The lessor is not permitted to pass on the costs of registration to the lessee.

The Tawtheeq system requires a number of details to be provided during the first phase of the registration. Once the details are provided, the application is submitted to Abu Dhabi Municipality (ADM) who will approve or otherwise, the registration.

If the registration is approved during the first phase, the fees are payable and completion occurs.

The associated registration fees are as follows:

  • AED 1,000 per building registration (plus AED 5 for registration of each leasable unit)
  • AED 100 per registration of each new lease
  • AED 100 for renewal of a lease
  • AED 50 for termination of a lease
  • AED 50 for any further administration

The Tawtheeq online system will request a number of fields to be populated for the registration of a lease unit, including (but not limited to):

  1. The trade licence number
  2. The lessee’s trade licence issue and expiry date
  3. The company activity of the lessee
  4. The issuance authority
  5. The chamber of commerce and industry unified ID
  6. The address and contact number of the lessee
  7. The passport number and expiry date of the individual representing the lessee
  8. The visa type and expiry date of the individual representing the lessee
  9. The nationality of the individual representing the lessee
  10. The Emirates ID number of the individual representing the lessee
  11. The term commencement date of the lease
  12. The expiration date of the lease
  13. The rental value of the lease

The ADM has clarified that the lessor may attach special terms and conditions to the contract during the account opening process, which are then referred to the Legal Affairs Section at the ADM of Abu Dhabi City. If the ADM considers that the special terms and conditions are inconsistent with the general terms of the lease and other applicable rules, the ADM may notify its rejection of those terms to the property owner. Renewal, surrender and termination are all carried out by way of the online Tawtheeq system.

Leases of over four years

All Abu Dhabi buildings and units within them being leased on terms of more than four years are required to be registered under a system known as Tamleeq. There are two different registration fees payable depending on the term of the lease:

  • For leases over four years but less than 25 years – Registration fees are 1% of the first year’s rent
  • For leases over 25 years – Registration fees are 4% of the value of the consideration.

Responsibility for the registration fees can be provided for in the lease.

(b) In relation to leasehold interests located within the Abu Dhabi Global Market free zone:

The ADGM maintains its own land registration system (ADGM Land Register). It provides that:

  • A defined list of conveyances (which includes leasehold interests or a short-form thereof (which omit commercially sensitive details)) and subsequent variations must be registered on the ADGM Land Register.
  • Agreements to create such conveyances must also be registered on the ADGM Land Register.
  • The obligation is on the grantor of the contract to register it.
  • Conveyances should be executed in the English language and, if not, a translation into English language, should be provided.
  • The ADGM Land Register shall be publicly searchable and the ADGM shall issue certificates of title to interested parties and also priority searches (which can be used by lenders when taking security interests) – these are very useful features than are not currently available through the Abu Dhabi land registration system.
  • Registration of a conveyance is evidence that such conveyance was in a form approved by the ADGM.
  • A registered owner holds the registered interest free from all other interests except for:
    • interests that are already registered
    • easements or public rights of way
    • rights in favour of the relevant authority
    • implied easements, and
    • statutory charges
  • There is no compensation available to registered owners for errors in the registered title maintained by the ADGM Land Register or fraudulently registered conveyances for example – this is unfortunate, as the Dubai International Financial Centre, a similar free zone, maintains a compensation fund to allow it to pay compensation to affected parties in such instances.
  • The lessor is responsible for the registration of a lease, which must be done within 28 days of the parties signing.
  • In order to be registered, the lease should contain key details such as the parties, length of term, the commencement date, any renewal rights and sufficient detail to identify the premises.
  • A memorandum (short-form) lease can be registered in lieu of a full lease.
  • Leases and also agreements to lease (a pre-lease contract often signed when a development is under construction/not quite ready for occupation and use) can both be registered with the ADGM Land Register.
  • Registration fees are payable as follows:
    • Lease with a term of less than 10 years (including any renewals) is AED 100 per year.
    • Lease with term of 10 years or more (including any renewals) is 2% of total value of contract (subject to no maximum).
United Arab Emirates - Dubai

United Arab Emirates - Dubai

There are three such arrangements:

  1. Lease – this is a personal right for a period limited in time. It requires registration at either the Dubai Land Department ('DLD'), in the case of leases with a term of 10 years or more, or at the Real Estate Regulatory Agency ('RERA') for short-term leases (ie less than 10 years). "Foreigners" can only register a lease at the DLD (ie a lease with a term of 10 years or more) in areas of Dubai designated for foreign ownership. A 'foreigner' is someone other than a national of the Gulf Cooperation Council countries, being the United Arab Emirates, Bahrain, Kuwait, Oman, Qatar and Saudi Arabia. The lease term for 'foreigners' cannot exceed 99 years
  2. Usufruct – this is a real right allowing the holder to use the property of another and exploit it as long as it remains in the same condition. A 'foreigner' (ie someone other than a national of the Gulf Cooperation Council countries) can only acquire a usufruct interest in land in an area designated for foreign ownership and such a right can be for a maximum of ninety-nine years only. A usufruct right is typically granted when a legal right enforceable against third parties is required
  3. Musataha – this is a real right and is a specific form of usufruct containing the right for the holder to develop the land of another. Again, a 'foreigner' can only acquire such an interest in a designated area and the term of a musataha right cannot exceed fifty years

In addition, licences are sometimes used with the intention of avoiding the application of landlord and tenant law, although the concept of a licence in this context does not exist in law. Therefore, such arrangements risk being categorised as a lease.

UK - England and Wales UK - England and Wales

UK - England and Wales

There are two main types of arrangement allowing a person, company or other organization to occupy real estate for a limited period of time without buying it outright.

The first is a lease, which grants the right of exclusive possession of the property for an agreed period of time. A lease confers on the tenant contractual rights and a proprietary interest in the property, which can be transferred to a third party subject to specific restrictions set out in the lease.

The second is a licence which grants permission to occupy the property. Unlike a lease, the occupier of a property under a licence does not have exclusive possession and cannot transfer the licence to a third party. In addition, under a licence the period of occupation does not have to be fixed.

In granting a licence, property owners need to ensure that they are not inadvertently granting a lease. The courts will not consider whether the document is called a lease or a licence but will instead look at the substance of the agreement to determine whether it constitutes a lease or a licence.

Although there is no distinction in law, some very long leases are commonly granted (for example 999 years) at a very low rent. We are not intending to cover these here as they represent a capital interest in a property and do not generate significant or regular income.

UK - Scotland

UK - Scotland

Scots law differentiates between leases and ground leases, which are more akin to ownership of a property. Normally leases are used for commercial premises and generally much more often than ground leases.

Ukraine

Ukraine

Ukrainian law provides for two main types of real estate lease, depending on the type of property:

  • land leases, and
  • real estate leases (which deal with premises, buildings etc)

In addition, Ukrainian law provides for the following:

  • restricted use of someone else's property (servitude which is the right to use someone else's property in order to meet a need if this cannot be done in any other way)
  • restricted use of someone else's land for agricultural purposes (emphyteusis), and
  • restricted use of someone else's land for construction (superficies)
United States

United States

There are two main types of arrangement allowing a person, company or other entity to occupy real estate for a limited period of time without acquiring the fee title interest.

The first is a lease, which grants the right of exclusive possession of the property for an agreed period of time. A lease confers on the tenant contractual rights and a leasehold interest in the property, which interest can in most States be transferred to a third party except to the extent restricted by the terms of the lease. There are many different variants of leases but commercial leases broadly fall into one of two categories: ‘Gross Leases’ where the tenant’s financial responsibility is primarily limited to the payment of rent and the landlord is responsible for the operating costs of the property; and ‘net leases’ where, in their purest form, the tenant is responsible for the payment and rent and is also responsible for the cost of operating, insuring and paying taxes on the real property. Net leases tend to be longer in duration than other leases. A ‘ground lease’ is a sub-specie of net lease where the tenant is given rights to develop a parcel of land leased to it. Typically in a ground lease, the improvements are owned by the tenant for the duration of the ground lease term and at the expiration or termination of the lease, revert to the ownership of the landlord or are removed by the tenant.

The second main type of arrangement is a license, which grants permission to occupy or use the property. Unlike a lease, a license is a personal contractual arrangement between the original parties conferring no transferrable interest in the real estate and often is not binding upon future owners of the land. The remedies of a licensee against a defaulting licensor are in many cases severely circumscribed when compared to the rights of a tenant against a defaulting landlord.

Zimbabwe

Zimbabwe

A lease is the most common arrangement available in Zimbabwean law that allows for occupation and use of real property for a limited time. This grants exclusive possession to the lessee for a specified period, subject to the terms and conditions specified in the lease agreement. In terms of the Common Law, a usufructuary right of use may be granted by a property holder for the duration of the right holders’ lifetime.