REALWorld Law

Commercial leases

Security of tenure

Does a lessee have a right to continue to occupy the relevant real estate after the expiry of a commercial lease?

Angola

Angola

Yes, the lessee is covered by a special provision of the law and the lease will not end following the elapse of its contractual term and lessee will be entitled to automatically renewals. An exception to this rule pursuant to the Lease Law occurs when parties expressly address in the Lease the:

  • Break option of the lessor, and
  • A contract term of more than five years

Provided the two mentioned conditions are met, the lessor can terminate the lease and, in such case, the lessee has to leave the premises upon elapse of the contract. Additionally, if the lessee is a natural person, in the event the lessee dies the commercial lease does not expire. The lessee’s heirs have the right to the transfer of the lease, within 180 days after the lessee’s death. If the heirs do not wish the transfer of the lease they must waive it by written notice to the lessor, within 30 days of the lessee’s death.

Australia

Australia

There are two ways in which a tenant can continue to occupy the relevant real estate when a commercial lease has expired. Firstly, it is common for a lease to contain an option for the tenant to renew the lease for an additional term, however, this must be negotiated between the parties.

Alternatively, a lease may contain a holding over clause which allows tenants to occupy the leased premises on the basis of a monthly tenancy once the lease term has expired, terminable by either party on a month’s notice. However, where the landlord does not consent to the tenant continuing possession past the expiry of the lease, the landlord is entitled to immediate possession of the leased premises.

Belgium

Belgium

General leases (offices, warehouses, industrial buildings)

A written lease with a fixed term ceases automatically on the expiry of the specified term, with no requirement to give notice of termination (unless agreed otherwise). If the term of the lease is indefinite (or where the lease is in the form of an oral agreement), a notice of one month is required.

When a written, fixed-term office lease expires, if the tenant stays in the premises with the explicit or tacit approval of the landlord, then a new lease agreement arises on the same conditions and with the same duration as the initial lease. However, when prior notice of termination has been served by the landlord, the tenant cannot rely on this renewal.

Parties often provide for the automatic extension of the lease so that the tenant can stay in the leased premises at the end of the initial term for a fixed or indefinite period (depending on what they have agreed to in the contract).

Commercial leases (retail and workshops)

Very specific procedures apply to the renewal of commercial leases. The tenant has a prior right, on the expiry of the lease and on the expiry of the first and second renewals, to renew the lease agreement for a further nine years (unless the parties agree on a shorter period in a notarized instrument or by a declaration before a judge) so that either he or any subtenant can continue the same retail trade.

In order to obtain a renewal, the tenant must notify the landlord of his intention either by registered mail or by notice served by a bailiff between the eighteenth and the fifteenth month before the expiry of the existing lease agreement.

The grounds on which the landlord can refuse to renew are limited and specified in the Commercial Lease Act:

  1. The landlord – or, to a certain extent, members of his family – wants to occupy the rented premises himself
  2. The landlord has received a higher offer by a third party and the current tenant does not match this offer
  3. The landlord desires to put the premises to a non-commercial use
  4. The landlord wants to refurbish/rebuild the building or part of it
  5. The tenant has seriously breached its obligations under the current lease
  6. The absence of a legitimate interest of the tenant, who started a similar trade in the immediate neighbourhood of the rented property before the expiry of the term

If the landlord relies on one of the above grounds for refusal, then compensation may be payable in some cases. If the landlord wishes to refuse to renew on other grounds, then he will have to pay the tenant compensation equal to three years’ rent.

Commercial leases (pop-up retail and workshops)

Under the Regional pop-up lease regulations, Parties are free to extend the pop-up lease in writing provided that its term does not exceed one year in total. In the event the term of the pop-up lease exceeds one year (following its possible extensions), it shall be considered as a lease agreement falling under the Commercial Lease Act with a term of nine years as from its entry into force.

Bosnia-Herzegovina

Bosnia-Herzegovina

It is common practice in Bosnia and Herzegovina for a renewal provision to be included in a lease contract.

Canada

Canada

A tenant can continue to occupy the relevant real estate when a commercial lease has expired in two ways. Firstly, it is common for a lease to contain an option for the tenant to renew the lease for an additional term; however, this must be negotiated between the parties.

Alternatively, a lease may contain a holding over clause which allows the tenant to remain in occupation of the leased premises on the basis of a monthly tenancy once the lease term has expired, terminable by either party on a month’s notice. However, where the landlord does not consent to the tenant continuing possession past the expiry of the lease, the landlord is entitled to immediate possession of the leased premises.

China

China

Leases with a fixed term may be renewed automatically on the same terms if, after the term expires, the lessee continues to use the premises and the lessor does not object. However, the renewed lease will be for an indefinite term, and can be terminated at any time with reasonable notice.

Croatia

Croatia

The renewal of a lease agreement is subject to mutual agreement between the parties.

Czech Republic

Czech Republic

Leases granted for a fixed term may be renewed automatically if, after the term expires, the lessee continues to use the premises and the lessor does not require the lessee to vacate  the property within three months from the termination of the lease. In these circumstances, the lease will be extended by a period of two years, where the original fixed term exceeded two years, or by the original term of the lease where this was less than two years.

Denmark

Denmark

If the contract is limited to a certain time, the lessee has no rights to continue to occupy the real estate after expiry of the lease. If the lessee wishes to continue to occupy the real estate, the parties must re-negotiate, but the landlord is not obliged to do so. However, if the lessee continues to occupy the property with the lessor’s knowledge, without the lessor has requested the lessee to vacate the lease, the lease continues on the same terms as the expired contract — but now the lease is not limited in time.

France

France

With certain exceptions specified by law, the tenant has a right to renew the lease for a nine-year term – this does not apply to short-term leases that are granted for a term of up to three years.

If the tenant wishes to renew, and has not already received a notice from the landlord refusing a renewal, he may apply for the lease to be renewed. This application must be made within the six-month period preceding the expiry of the lease or at any time during the lease extension. The landlord must respond to this application within three months. If the landlord does not respond then the lease is renewed automatically, for a nine-year term.

Unless a refusal to renew is on the grounds specified below, the landlord must pay compensation (indemnité d'éviction) to the tenant. The grounds upon which the landlord can refuse to renew and avoid paying compensation are:

  • serious and legitimate reasons, usually resulting from a default by the tenant under the lease (eg unpaid rent, sub-letting without consent); and
  • in certain other circumstances provided for by law (eg in order to perform works or to sell the business).
Germany

Germany

No, the tenant is not entitled to continue to occupy the leased property. However, if the tenant continues to use the leased property after the expiry of the term of the lease, the lease continues as an unlimited lease agreement unless one of the parties contests this within two weeks. In the case of the landlord, this time limit dates from when the landlord first becomes aware that the tenant has not vacated the leased property.

Hong Kong, SAR

Hong Kong, SAR

No. Since the Landlord and Tenant (Consolidation) (Amendment) Ordinance 2004 came into effect on 9 July 2004, the former security of tenure regime has been removed.

Hungary

Hungary

No, there is no legislation in Hungary which gives a tenant of business premises the right to remain in occupation once the lease has expired, with the only exception being where the tenant remains in the leased premises and landlord fails to object within 15 days of the expiry of the lease term, in which case the lease is legally converted into a lease for an indefinite term.

Ireland

Ireland

If a commercial tenant is in continuous occupation of a commercial premises for over five years, the tenant has a statutory right to a new tenancy on the termination of the existing arrangement ('business equity' relief) unless the tenant 'contracts out'. A tenant with a lease of less than five years does not have this right. Different rules apply to residential tenants.

Section 47 of the Civil Law (Miscellaneous Provisions) Act 2008 now allows commercial tenants to contract out of their statutory rights to a new tenancy in all commercial leases by entering into a Deed of Renunciation. Previously, this could only be done where the relevant premises were used for office purposes.

Italy

Italy

No, but the Italian Tenancy Law provides that, upon expiry, the lease is tacitly and automatically renewed unless either party denies the renewal by giving to the other party written notice thereof at least 12 months (or 18 months in the case of hotels) before the relevant expiry date. Upon the first expiry date, the landlord can deny the tacit renewal only in specific circumstances, as set forth under the Italian Tenancy Law.

Japan

Japan

Ordinary Lease

In principle, the lessee possesses the right to continue occupation of the premises after the expiry of the lease, provided that no ‘due reasons’ exist for the lessor to deny a renewal term for an ordinary lease.  Where ‘due reasons’ exist for non-renewal, the lessor must provide the lessee with six months prior notice of non-renewal. When considering the existence and validity of any ‘due reasons’ for non-renewal, courts typically consider, including but not limited to, the following factors:

  • whether there are circumstances requiring non-renewal of the lease (eg renovation of the premises as a result of disrepair);
  • whether there is necessity for the lessee to use or profit from the premises; and
  • whether the lessor will pay eviction compensation to the lessee and the amount of such compensation.

Fixed-term Lease

In the case of a fixed-term lease, the lessee does not possess the right to continue occupation of the premises after the expiry of the lease without the lessor's consent. The lessor is required (i) to explain in writing to the lessee the nature of the fixed-term lease prior to the commencement of the lease and (ii) to send non-renewal notice to the lessee six to twelve months prior to the expiry date of the lease term.

Netherlands

Netherlands

Yes, depending on the type of lease and the course of events.

Industrial leases and leases of other types of commercial space (office, business space, non-retail)

The Dutch Civil Code only contains mandatory provisions with regard to protection from eviction for the lessee at the end of the lease. The obligation of the lessee to vacate the leased premises is suspended for a period of two months by law as from the date of vacation specified in the notice to vacate.

The lessee is not entitled to a suspension of the obligation to vacate if it has:

(a) given notice of termination on its own behalf;

(b) expressly agreed to the termination of the lease; or

(c) been ordered to vacate the leased premises by court order.

Within the two-month period in which the lessee is entitled to a suspension of the obligation to vacate, it may ask the court to extend the term of suspension to a period of one year. By filing this request, the obligation to vacate is suspended until the court has given a judgment. As the lessee is entitled to repeat this request two more times, the lessee can - in theory - suspend the obligation to vacate the leased premises by a maximum of three years.

Retail leases (including hotels and restaurants)

The lessor is obliged to state a mandatory ground for the termination. The most frequently relied on ground is that the lessor urgently needs the leased premises for its own use (including in some circumstances to carry out a renovation).

On the expiration of a period of at least ten years, the lessor can use an additional statutory ground for termination, being the general balance of interests. This means that the lessor may state any ground for the termination as long as its interest in the termination is more significant than the interest of the lessee in continuing the lease.

The lessee is not obliged to accept a termination of the lease by the lessor. In the event that the lessee disagrees with the termination, the lessor must ask the court to terminate the lease. The main rule is that the lessee can stay in the premises until there is an irrevocable judgment of the court in this regard. Dutch case law indicates that the lessee will have significant protection against termination.

Nigeria

Nigeria

A lessee of real property under any category whether residential or commercial is protected under the law to hold over possession even after expiration of the lease. The lessor does not have an automatic right to re-enter or recover possession of the property despite that the parties inserted in the contract a provision for re-entry into the property by the lessor, upon the expiry of the lease.

Where parties agree in the lease Agreement for the mode of notice to be issued before recovery of possession, same must be complied, otherwise, the lessor must comply with the requirement to serve on the lessee, all mandatory notices to determine the lease (notice to quit and notice of intention to recover possession) and seek an order of the court to recover possession and evict the lessee from the property.

A lessee holding over after the expiration of its lease is regarded as a statutory tenant and cannot be evicted except by laid down procedures which mandatorily are to be strictly complied with by the lessor. The lessee will, however, be liable to pay rent for the period spent in the property after the expiration of the lease.

Norway

Norway

There is no legislation in Norway conferring security of tenure.

Poland

Poland

A tenant has no right to continue to occupy real estate when a lease has expired. However, if the tenant continues to use the leased property after the expiry of the initial term with the landlord's consent, the agreement is regarded as extended for an indefinite period of time. Other provisions can be stipulated in the agreement.

Portugal

Portugal

No, except if the tenant is covered by a special provision of the law or if such authorization was specified by the parties in the lease.

If the tenant does not return the property after the contract ends, they are under an obligation to pay the rent value until the moment of the return of the property as compensation. If the tenant is in default the compensation is double that value. 

Romania

Romania

Where the lease agreement is entered into for a definite period of time, the agreement terminates at the expiry of the lease term and there is no obligation for the landlord to give any prior notice or to renew the lease agreement.

Nevertheless, where the tenant continues to use the premises and fulfil its obligations after the expiry of the contractual or legal term, with no resistance of the landlord, a new lease agreement, subject to the same terms, including the guarantees, but for an indefinite period of time is deemed to have been concluded between the parties. However, the parties may expressly provide in the lease agreement that it will not be deemed to have been renewed and will automatically be terminated at its expiry date.

Slovak Republic

Slovak Republic

As a general rule, fixed-term leases terminate upon the expiry of the specified term. However, a lease of residential premises can be extended automatically for the same amount of time as the original term, up to a maximum of one year, if the tenant continues to use the property and the landlord does not file a request with the court to recover possession of the real estate in question.

This does not apply to leases of apartments and non-residential premises. Here, a lease can only be extended by amending the lease contract.

Spain

Spain

The Spanish Civil Code provides for an automatic right to renew the term of the lease tacitly for periods equal to the term for which the rent has been fixed (months, quarters, etc) if the term of the lease comes to an end and none of the parties express an intention to terminate the lease. This right can however be waived if so provided in an agreement.

Sweden

Sweden

No, tenants have no automatic right to continue to occupy premises when a lease has expired.

Thailand

Thailand

In general, under the relevant laws, after expiration of a commercial lease, the lessee will not have a right to continue to occupy the relevant real estate. This matter is a contractual issue and subject to the agreement between the contracting parties.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Within Abu Dhabi and outside the Abu Dhabi Global Market free zone

As of November 2013 (provided the relevant new law is published – which it had not been at the time of writing), leases no longer automatically renew at the end of the term for the same length as the initial term (as they did up until then). If a party does not wish to renew or wishes to re-negotiate the terms of the lease, three months’ notice is required for commercial property and two months’ notice is required for residential property.

During the term of a lease, the only grounds for removing the lessee are:

  • Non-payment of rent
  • Unauthorized assignment
  • Excessive occupation
  • Unauthorized or unlawful use
  • Redevelopment, or lessor’s own need or wish to occupy

Within the Abu Dhabi Global Market free zone

In the Abu Dhabi Global Market free zone, there is no security of tenure – meaning that a tenant does not have a statutory right to renew their lease at the end of the term. There are no provisions in ADGM law regarding eviction.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

If a lease expires and the tenant remains in occupation without objection from the landlord, the lease is deemed to be renewed on the same terms for the lesser of (i) the same term as the original lease and (ii) one year.

The law states that a lease comes to an end upon its expiry (ie there is no automatic renewal) but it is prudent practice for one party to the lease to notify the other party in advance (commonly, at least two months before expiry) that it will be vacating the property upon the expiry of the lease.

UK - England and Wales UK - England and Wales

UK - England and Wales

There is only a right to renew the contractual period of the lease if the lease explicitly provides for this or if the tenant has “security of tenure”. If a tenant is actually occupying a property for business purposes, then in most cases statute grants them security of tenure. If the tenant does have security of tenure, the lease will not end following the expiry of its contractual term and the tenant will be entitled to a new tenancy unless the landlord has reasonable grounds to oppose it. In this case compensation may be payable. It is very common in the current market for landlords to disapply these statutory rights of security of tenure, although a strict procedure must be followed before the lease starts. This procedure involves serving notice on the tenant and the tenant making a declaration that they agree to exclude these rights.

UK - Scotland

UK - Scotland

There is no statutory provision for continuation of the period of a real estate lease beyond that provided in the lease other than the Tenancy of Shops (Scotland) Acts 1949 and 1964, which provide limited security of tenure to tenants of retail premises. Under common law, if notice of termination is not given at the appropriate time by either the landlord or the tenant, the lease continues by 'tacit relocation' for a further period of up to one year on generally the same terms, and so on from year to year until proper notice is given.

Ukraine

Ukraine

The Civil Code of Ukraine provides that if a lessee under a lease agreement remains in occupation of real estate following expiry of the lease term, this continued occupation will be considered as an extension of the original lease term provided that the landlord does not serve an objection within one month of the lease expiry date. The Commercial Code of Ukraine provides that, if neither the landlord nor the lessee serve a notice relating to the termination or change of conditions of the lease within one month following the expiry of the original lease term, then the lease agreement is considered to be extended for a term equal to the original term on the same conditions.

The Law of Ukraine "On land lease" does not provide for automatic extension of a land-lease term if the lessee continues using the land upon expiry of the lease term, except for private lands (which may be extended automatically subject to it is specified in land lease agreement). The law also envisages that lessee which properly fulfils its obligations under land lease agreement enjoys a pre-emptive right to conclude lease agreement on a new term (renew the lease agreement). To exercise its pre-emptive right, the lessee shall provide landlord with one month prior written notice on renewal of the lease agreement and respective draft agreement. If parties fail to agree on rent or other material terms of agreement, the lessee loses its pre-emptive right. In this case, if the lessee continues using the land and the landlord does not send a written objection within one month from the lease expiry date, the lease agreement deemed extended for the same term and parties are obliged to enter into respective agreement within one month.

United States

United States

Generally speaking, a tenant’s right to occupy the leased premises ends when the term of its lease expires. However, under the common law ‘holdover rule’, a tenant remaining in possession after lease expiration without the landlord’s agreement may be treated by the landlord either as a trespasser subject to eviction or as a tenant under a lease for a new term, which term is generally equal to the rent payment periods set forth in the lease.  For example, if rent is paid monthly, the new term would be month to month and subject to 30 days’ notice by either party to terminate.  Most states have enacted legislation abolishing this rule – the terms of those statutes vary widely in how they govern the relationship between the landlord and the holdover tenant.  Consequently, guidance with respect to the actions to be taken by a landlord to ensure timely vacation of the premises should be sought from a qualified local lawyer.  That said, a well-drafted lease will typically clearly state how a holdover situation will be handled; for example, it may give the landlord broad rights to immediately evict the holdover tenant while charging the holdover tenant a much higher rate of rent during the period of holdover.

Zimbabwe

Zimbabwe

The right to continue with a lease will be governed by the lease agreement entered into between the parties. If the lease agreement does not make provision for the tenant to occupy the property after expiration of the lease, then the tenant has no lawful right to do so. Should the tenant continue to occupy the premises unlawfully, then the landlord will have to pursue the process for eviction. In the interim, the unlawful tenant will be regarded as statutory tenant in terms of the Commercial Premises Lease Control Act Rent Regulations, provided that he continues to pay the rental due within seven days of the due date and performs in terms of the conditions of the lease. Whilst being a statutory tenant, the lessee is entitled to retain possession of the commercial premises and benefit from all the terms and conditions. He may only relinquish his entitlement to possession upon giving notice in terms of the lease or upon reasonable notice in the event that no notice is required. Once the lessor obtains an order to recover possession of the commercial premises or for ejectment of the lessee, no notice will be required to be given.